McMinn Retail, Inc., is a retailer that has engaged you to assist in the prepara
ID: 2479262 • Letter: M
Question
McMinn Retail, Inc., is a retailer that has engaged you to assist in the preparation of its financial statements at December 31, 2014. Following are the correct adjusted account balances, in alphabetical order, as of that date, Each balance is the "normal" balance for that account. Instruction: Prepare an income statement for the year ended December 31, 2014, which includes amounts for gross profit, income before income taxes, and net income. List expenses(other than cost of goods sold and income tax expense) in order, from the largest to the smallest dollar balance. You may ignore earnings per share. Prepare a statement of retained earnings for the year ending December 31, 2014. Prepare a statement of financial position (balance sheet) as of December 31, 2014, following these guidelines: Include separate asset and liability categories for those assets which are "current." Include and label amounts for total assets, total liabilities, total stockholder's equity, and total liabilities and stockholder's equity. Present deferred income taxes as a noncurrent liability. To the extent information is available that should be disclosed, include that information in disclosure (template provided).Explanation / Answer
Mc Minn Retail Inc. All Amounts in $ Income Statement for the year ending December 31, 2014 Sales 232850 Less : Sales Returns and Allowances 2000 230850 Less : Cost of Goods Sold 99325 Gross Profit 131525 Less : Indirect Expenses Salaries Expense 89095 Depreciation Expense Office Equipment 8000 Rent Expense 6960 Utilities Expense 4620 Insurance Expense 1900 Office Supplies Expense 1020 111595 Income before Income Taxes 19930 Income Tax Expense 2650 Net Income 17280 Statement of Retained Earnings for the year ending December 31, 2014 Retained Earnings (January 2014) 21000 Net Income for the year 17280 38280 Dividends Declared 4000 Retained Earnings (December 2014) 34280 Balance Sheet as on December 31, 2014 Assets Current Assets Cash 18990 Accounts Receivable 3100 Merchandise Inventory 12500 Office Supplies 400 Treasury Stock (200 common shares at cost) 2250 Prepaid Rent 1740 Total Current Assets 38980 Fixed Assets Land 38500 Office Equipment 40000 Less : Accumulated Depreciation 12000 28000 Total Assets 105480 Liabilities Current Liabilities Acounts Payable 7400 Notes Payable 4750 Premium on Bonds Payable 1750 Sales Taxes Payable 1300 Total Current Liabilities 15200 Long-Term Liabilities Bonds Payable 22500 Deferred Income Taxes 1500 Total Long-Term Liabilities 24000 Shareholders' Equity Common Stock (1,800 shares, $ 10 par value) 20000 Additional Paid-in Capital 7000 Preferred Stock (250 shares, $ 20 value) 5000 Retained Earnings 34280 Total Shareholders' Equity 66280 Total Liabilities and Shareholders' Equity 105480 Notes to Accounts (i) Common Stock is currently stated in the balance sheet at the market value of $ 15 per share (Face Value $ 20,000 + Additional Paid-in Capital $ 7,000). (ii) Notes payable shown under " Current Liabilities" are due on December 31, 2015. (iii) Bonds Payable shown under "Long-Term Liabilities" are due on December 31, 2019.