Reese Inc., a provider of consulting services, was founded on October 1, 2022. At the end of the first month of operations, the company decided to prepare an income statement, retained earnings statement, and balance sheet using the following information. Prepare an income statement, retained earnings statement, and balance sheet. Accounts payable $ 3,300 Supplies $ 2,460 Interest expense 410 Supplies expense 380 Equipment (net) 48,200 Depreciation expense 270 Salaries and wages expense 2,500 Service revenue 20,920 Bonds payable 21,500 Salaries and wages payable 445 Unearned service revenue 4,065 Common stock 9,100 Accounts receivable 1,300 Interest payable 140 Cash 3,950 Instructions Using the information, prepare an income statement and retained earnings statement for the month of October 2022 and a balance sheet as of October 31, 2022. End. retained earnings $17,360

Answer and Explanation:

The preparation of the income statement, retained earnings, and the balance sheet is presented below:

Income statement

Service revenue                      $20,920

Less: expenses

Salaries & wages expense      -$2,500

Interest expense                      -$410

Depreciation expense              -$270

Supplies expense                     -$380

Total expense                         -$3,560

Net income                              $17,360

Retained earnings

Opening retained earnings balance $0

Add: net income                               $17,360

Ending retained earnings balance   $17,360

Balance sheet

Assets

cash                                             $3,950  

Accounts receivable                   $1,300  

Supplies                                      $2,460  

Equipment ,net                           $48,200  

total assets                                 $55,910  

Liabilities and Stockholders Equity    

liabilities:      

Accounts payable                     $3,300    

unearned service revenue       $4,065    

Salaries and wages payable    $445    

interest payable                        $140    

Bonds payable                         $21,500    

total liabilities                           $29,450  

Stockholders equity:      

Common stock                         $9,100    

Retained earnings                    $17,360    

total stockholders equity          $26,460  

total liabilities & stockholders equity $55,910

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