P1-59A (Learning Objectives 4, 5: Construct and analyze an income statement, a statement of retained earnings and a balance sheet; evaluate business operations) The assets and liabilities of Post Oak, Inc., as of December 31, 2012, and revenues and expenses for the year ended on that date follow.

 

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Land....................................	$    9,000	Equipment..........................	$  36,000
Note payable.......................	34,000	Interest expense..................	5,100
Property tax expense ...........	2,100	Interest payable ..................	1,200
Rent expense .......................	11,000	Accounts payable ...............	8,000
Accounts receivable.............	30,000	Salary expense....................	30,000
Service revenue....................	147,000	Building..............................	123,000
Supplies...............................	2,300	Cash...................................	20,000
Utilities expense ..................	3,700	Common stock...................	5,000
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Beginning retained earnings was $114,000, and dividends totaled $37,000 for the year.

â–¶ Requirements

1.    Prepare the income statement of Post Oak, Inc., for the year ended December 31, 2012.

2. Prepare the company’s statement of retained earnings for the year.

3.    Prepare the company’s balance sheet at December 31, 2012.

4.    Analyze Post Oak, Inc., by answering these questions:

a.    Was Post Oak profitable during 2012? By how much?

b.   Did retained earnings increase or decrease? By how much?

c.    Which is greater, total liabilities or total equity? Who owns more of Post Oak’s assets, creditors of the company or the Post Oak’s stockholders?