During 2010,Winterset Company Performed Services for Which Customers Paid or Promised

During 2010,Winterset Company performed services for which customers paid or promised to pay $587,000.Of this amount,$552,000 had been collected by year-end.Winterset paid $340,000 in cash for employee wages and owed the employees $15,000 at the end of the year for work that had been done but had not paid for.Winterset paid interest expense of $3,000 and $195,000 for other service expenses.The income tax rate was 35%,and income taxes had not yet been paid at the end of the year.Winterset declared and paid dividends of $20,000.There were no other transactions that affected cash.
Requirements:
1.What was the amount of the increase or decrease in cash during the year?
2.Prepare an income statement for Winterset for the year.
3.At the beginning of 2010,Winterset's retained earnings were $90,000.Prepare a statement of retained earnings.

Correct Answer:

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1. The amount of the increase in cash du...

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