Answer:
Income Statement for the year ended December 31, Year 1.
Sales Revenue                        100,000
Less Expenses :
Fuel Expense                 (15,000)
Rent Expense                 (20,000)
Advertising Expense            (5,000)
Salaries and Wages Expense    (20,000)  (60,000)
Net Income/ (loss) Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 40,000
Statement of retained earnings for the year ended December 31, Year 1
Retained Earnings Opening Balance         0
Add Profit for the year                   40,000
Less Dividends for the year               (10,000)
Retained Earnings Closing  Balance        30,000
Balance sheet for the year ended December 31, Year 1.
Non - Current Assets
Equipment                             50,000
Total Non - Current Assets                50,000
Current Assets
Accounts Receivable                    40,000
Cash                                  10,000
Total Current Assets                     50,000
Total Assets                           100,000
Equity and Liabilities
Equity
Common Stock                        20,000
Retained Earnings                      30,000
Total Equity                            50,000
Non - Current Liabilities
Notes Payable                         20,000
Total Non - Current Liabilities             20,000
Current Liabilities
Accounts Payable                       30,000
Total Current Liabilities                  30,000
Total Equity and Liabilities               100,000
Explanation:
Income Statement.
Income / loss = Sales less Expenses
Retained Earnings
Retained Earnings Closing Balance = Opening Retained Earnings Balance plus Profit / Income for the year less dividends declared.
Balance Sheet.
Assets = Equity + Liabilities
