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I don’t understand E1-6 please help. ee revenue In Mortgage payable Supplies expense Rent expense Salaries and wages expense Instructions Classify each of the above accounts as an asset (A), liabilit

I don’t understand E1-6 please help.

ee
revenue
In
Mortgage payable
Supplies expense
Rent expense
Salaries and wages expense
Instructions
Classify each of the above accounts as an asset (A), liability (L), stockholders' equity
revenue (R), or expense (E) item.
E1-4 This information relates to Benser Co. for the year 2017
SE)
Retained earnings, January 1, 2017$67,000
Advertising expense
Dividends
Rent expense
Service revenue
Utilities expense
Salaries and wages expense
Prepare income statem
retained earnings state
LO 3), AP
1,800
6,000
10,400
58,000
2,400
30,000
Instructions
After analyzing the data, prepare an income statement and a retained earnings statement
for the year ending December 31, 2017
information was taken from the 2017 financial statements of Prepare income stat
pharmaceutical giant Merck and Co. (All dollar amounts are in millions.)
retained earnings st
LO 3),AP
Retained earnings, January 1, 2017
Cost of goods sold
Selling and administrative expenses
Dividends
Sales revenue
Research and development expense
Income tax expense
$43,698.8
9,018.9
8,543.2
3,597.7
38,576.0
5,845.0
2,267.6
Instructions
(a) After analyzing the data, prepare an income statement and a retained earnings state-
ment for the year ending December 31, 2017
Suppose that Merck decided to reduce its research and development expense by 50%.
What would be the short-term implications? What would be the long-term implica-
tions? How do you think the stock market would react?
(b)
a retain
E1-6 Presented here is information for Zheng Inc. for 2017.
Retained earnings, January 1
Service revenue
Total expenses
Dividends
$130,000
400,000
175,000
65,000
(LO 3), AP
Instructions
Prepare the 2017 retained earnings statement for Zheng Inc.
E1-7 Consider each of the following independent situations.
(a) The retained earnings statement of Lee Corporation shows dividends of $68,000,
Interpret fina
(L0 3),AP
while net income for the year was $75,000.
ating activities was $10,000, cash used in investing activities was $110,000, and cash
provided by financing activities was $130,000.
(b) The statement of cash flows for Steele Corporation shows that cash provided by oper-

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