the adjusted trial balance of pearl industries, inc., follows. view the adjusted trial balance. requirement…
the adjusted trial balance of pearl industries, inc., follows. view the adjusted trial balance. requirement 1. prepare pearl industries, inc.s single - step income statement and statement of retained earnings for the year ended december 31, 2024, and its bal\n\nthousands\nrevenues:\n sales revenue $ 43,200\nexpenses:\n cost of goods sold $ 25,100\n selling, administrative, and general expense 10,500\n total expenses 35,600\n income before tax 7,600\n income tax expense 2,900\n net income $ 4,700\nprepare the pearl industries, inc. statement of retained earnings for the year ended december 31, 2024. (include a subtotal after the \add\ line of the\n\npearl industries, inc.\nstatement of retained earnings\nyear of december 31, 2024\n\nthousands\naccounts payable\nadd: dividends\nsubtotal\nless: total revenues\nretained earnings, december 31, 2023
Answer
Explanation:
Step1: Prepare single - step income statement
Single - step income statement format: Net income = Total revenues - Total expenses. Total revenues = $43,200$ (given sales revenue). Total expenses = Cost of goods sold+Selling, administrative, and general expense + Income tax expense. Cost of goods sold = $25,100$, Selling, administrative, and general expense = $10,500$, Income tax expense = $2,900$. Total expenses = $25,100 + 10,500+2,900=35,600 + 2,900=38,500$. Net income = $43,200−38,500 = 4,700$.
Step2: Prepare statement of retained earnings
The basic formula for the statement of retained earnings is: Ending retained earnings=Beginning retained earnings + Net income - Dividends. However, since the beginning retained earnings and dividends are not given in the problem (assuming beginning retained earnings as $X$ and dividends as $D$), the statement of retained earnings in a general form would be:
| Pearl Industries, Inc. | Thousands |
|---|---|
| Statement of Retained Earnings | |
| Year of December 31, 2024 | |
| Retained earnings, December 31, 2023 | $X$ |
| Add: Net income | $4,700$ |
| Subtotal | $X + 4,700$ |
| Less: Dividends | $D$ |
| Retained earnings, December 31, 2024 | $X + 4,700−D$ |
Answer:
Single - step income statement:
| Revenues | Thousands |
|---|---|
| Sales revenue | $43,200$ |
| Total revenues | $43,200$ |
| Expenses | |
| Cost of goods sold | $25,100$ |
| Selling, administrative, and general expense | $10,500$ |
| Income tax expense | $2,900$ |
| Total expenses | $38,500$ |
| Net income | $4,700$ |
Statement of retained earnings (assuming beginning retained earnings $X$ and dividends $D$):
| Pearl Industries, Inc. | Thousands |
|---|---|
| Statement of Retained Earnings | |
| Year of December 31, 2024 | |
| Retained earnings, December 31, 2023 | $X$ |
| Add: Net income | $4,700$ |
| Subtotal | $X + 4,700$ |
| Less: Dividends | $D$ |
| Retained earnings, December 31, 2024 | $X + 4,700−D$ |