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When the work sheet is finished all the essential information to prepare the statement of retained earnings, income statement and balance sheet is readily available. Currently you need only recast the information into the appropriate financial statement format.
The information you require to prepare the income statement is in the work sheet's Income Statement columns in Exhibit 20. The information you require to prepare the statement of retained earnings is taken from the Statement of Retained Earnings columns in the work sheet. To make this statement use the beginning Retained Earnings account balance adds the net income or deduct the net loss and then subtract the Dividends. Hold the ending Retained Earnings balance forward to the balance sheet. Keep in mind that the statement of retained earnings helps to relate income statement information to balance sheet information. It does this by representative how net income on the income statement relates to retained earnings on the balance sheet.
The information essential to prepare a balance sheet comes from the Balance Sheet columns of Micro Train's work sheet. As stated previous the correct amount for the ending retained earnings appears on the statement of retained earnings.
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