Prepare an Income Statement, a Balance sheet and a Retained Earnings Statement b
ID: 2483929 • Letter: P
Question
Prepare an Income Statement, a Balance sheet and a Retained Earnings Statement based on this data:
Income Statement data:
Advertising Expense………. 125,000
Cost of Merchandise Sold………. 3,650,000
Delivery Expense………. 29,000
Depreciation Expense- Office Building and Equipment………. 26,000
Depreciation expense- Store Building and Equipment………. 95,000
Dividend Revenue ………. 3,575
Gain on Sale of Investment ………. 2,225
Income from Lifecare Co. Investment ………. 65,600
Income Tax………. 128,500
Interest Expense ………. 19,000
Interest Revenue………. 1,800
Miscellaneous Administrative Expense………. 7,500
Miscellaneous Selling Expense……….13,750
Office Rent Expense……….50,000
Office Supplies Expense ………. 10,000
Sales ………. 5,145,000
Sales Commissions ………. 182,000
Sales Salaries Expense ……….365,000
Store Supplies Expense ………. 22,000
Retained Earnings and balance sheet data:
Accounts Payable ………. 195,000
Accounts Receivable ………. 543,000
Accumulated depreciation- office building and equipment ………. 1,580,000
Accumulated depreciation- store building and equipment………. 4,126,000
Allowance for doubtful accounts ………. 8,150
Available for sale Investment ………. 110, 250
Bonds Payable, 6% 2022 ………. 400,000
Cash ………. 240,000
Common stock, $25 par (400,000 shares authorized;
85, 570 shares issued 82,670 shares outstanding) ………. 2,164,250
Dividends:
Cash dividends for common stock ………. 155,120
Cash dividends for preferred stock ………. 85,000
Stock dividends for common stock ………. 62,800
Goodwill ………. 510,000
Income tax payable ………. 40,000
Interest Receivable ………. 930,000
Investment in Lifecare Co. stock ………. 689,100
Investment in Nordic Wear Inc bonds ………. 62,000
Merchandise inventory (December 31, 2012)
at lower of cost (FIFO) or market ………. 780,000
Office Building and equipment ………. 4,320,000
Paid in capital from sale of treasury stock ………. 18,200
Paid in capital in excess of par- common stock ………. 842,000
Paid in capital in excess of par- preferred stock ………. 150,000
Preferred 5% stock, $100 par (3,000 shares authorized; 17,000 shares issued) ……….1,700,000
Premium on bonds payable ………. 19,000
Prepaid expenses ………. 26,500
Retained earnings, January 1, 2012 ………. 8,705,150
Store buildings and equipment ………. 12,560,000
Treasury common stock (3,900 shares of common stock at cost of $35 per share) ………. 136,500
Unrealized gain (loss) on available- for- sale investments ………. – 17,750
Valuation allowance for available- for sale investments ………. -17,750
Explanation / Answer
Multi Step Income Statement for the year ending 31 December 2016 Sales 5,145,000 Cost of merchandise sold 3,650,000 Gross Profit 1,495,000 Operating Expenses Selling, General & Administrative Expenses Selling expenses Advertising expense $125,000 Delivery expense 29,000 Miscellaneous selling expense 13,750 Sales commissions 182,000 Sales salaries expense 365,000 Administrative expenses Office rent expense 50,000 Store supplies expense 22,000 Office salaries expense Office supplies expense 10,000 Depreciation expense-office buildings and equipment 26,000 Depreciation expense-store buildings and equipment 95,000 Miscellaneous administrative expense 7,500 $925,250 Operating Income $569,750 Other Income & Expenses Dividend revenue 3,575 Gain on sale of investments 2,225 Income from Lifecare Co. investment 65,600 Interest expense -19,000 Interest revenue 1,800 Net Other Income & Expenses 54,200 Income Before tax $515,550 Income tax expense 128,500 Net Income $387,050 Statemnt of Retained earnings Retained earnings, January 1, 2016 8,705,150 Net Income $387,050 Cash dividends for common stock -155,120 Cash dividends for preferred stock -85,000 Stock Dividend for common stock -62,800 Unrealized gain (loss) on available-for-sale investments -17,750 Ending Retained Earnings 8,771,530 Balance Sheet as on 31 December,2016 ASSETS Amount $ Current Assets Cash 240,000 Available-for-sale investments (at cost) 110,250 Valuation allowance for available-for-sale investments -17,750 92,500 Accounts receivable 543,000 Allowance for doubtful accounts 8,150 534,850 Interest receivable (see note) 930 Inventory 780,000 Prepaid expenses 26,500 Total Current Assets A 1,674,780 Long Term assets Long Term Investment Investment in Lifecare Co. stock -Subsidary 689100 Investment in Nordic Wear Inc. bonds 62,000 Total Long term Investment 751,100 Property, Plant & Equipment Office buildings and equipment 4,320,000 Accumulated depreciation—office buildings and equipment 1,580,000 2,740,000 Store buildings and equipment 12,560,000 Accumulated depreciation—store buildings and equipment 4,126,000 8,434,000 Total Property, Plant & Equipment 11,174,000 Intangible Assets Goodwill 510,000 Total long term Assets B 12,435,100 Total assets A+B 14,109,880 Liabilities Current Liabilties Accounts payable $195,000 Income tax payable 40,000 Total Current Liabilties $235,000 Long term Liabilities Bonds payable 400000 Premium on bonds payable 19000 Total Long term Liabilities 419,000 Stockholders Equity Preferred Stock 1700000 Common Stock 2,164,250 Excess of issue price over par: -Common 842,000 -Preferred 150,000 Paid-in capital from sale of treasury stock 18,200 1,010,200 Retained Earnings 8,771,530 Treasury stock -136,500 Total Stockholders Equity 13509480 Total Liabilities & Stockholder equity $14,163,480 Note Interest Receivable is shown at $930000 which is not possible there is misprint I guess I think it is not $930 there is difference In Balance sheet