Question

Below information pertains to Eller Equipment Company for the year 2018. (Hint: Some of the items will not appear on either statement, and ending retained earnings must be calculated.) Salaries expense $109,000 Beginning retained earnings $ 48,100 Common stock 97,000 Warranties payable (short term) 5,200 Notes receivable (short term) 19,500 Gain on sale of equipment 13,000 Allowance for doubtful accounts 21,000 Operating expenses 52,000 Accumulated depreciation 53,000 Cash flow from investing activities 103,000 Notes payable (long term) 89,350 Prepaid rent 25,000 Salvage value of building 17,000 Land 82,000 Interest payable (short term) 8,000 Cash 35,300 Uncollectible accounts expense 32,000 Inventory 130,000 Supplies 5,200 Accounts payable 42,000 Equipment 160,650 Interest Expense 23,000 Interest revenue 4,900 Salaries payable 55,000 Sales revenue 914,000 Unearned revenue 34,000 Dividends 22,000 Cost of goods sold 582,000 Warranty expense 7,900 Accounts receivable 95,000 Interest receivable (short term) 2,300 Depreciation expense 1,700 Required Prepare a multistep income statement for Eller Equipment Company for 2018. Prepare a classified balance sheet for Eller Equipment Company for 2018.

Answer 1

Eller Equipment Company
Multi-step Income Statement
For the Year Ended December 31, 2018
Sales revenue		914000
Cost of goods sold		582000
Gross profit		332000
Operating expenses
Salaries expense	109000
Operating expenses	52000
Uncollectible accounts expense	32000
Warranty expense	7900
Depreciation expense	1700
Total operating expenses		202600
Net operating income		129400
Non-operating items
Gain on sale of equipment	13000
Interest revenue	4900
Interest expense	-23000
Total non-operating items		-5100
Net income		124300

Eller Equipment Company
Balance Sheet
December 31, 2018
Assets
Current assets
Cash		35300
Accounts receivable	95000
Less: Allowance for doubtful accounts	21000	74000
Notes receivable		19500
Interest receivable		2300
Supplies		5200
Inventory		130000
Prepaid rent		25000
Total current assets		291300
Property, plant, and equipment
Equipment	160650
Less: Accumulated depreciation	53000
Equipment, net		107650
Land		82000
Total property, plant, and equipment		189650
Total assets		480950
Liabilities
Current liabilities
Accounts payable		42000
Salaries payable		55000
Interest payable		8000
Warranties payable		5200
Unearned revenue		34000
Total current liabilities		144200
Long-term liabilities
Notes payable		89350
Total long-term liabilities		89350
Total liabilities		233550
Stockholders' Equity
Common stock		97000
Retained earnings		150400
Total stockholders' equity		247400
Total liabilities and stockholders' equity		480950

Working:

Retained earnings, beginning balance	48100
Add: Net income	124300
	172400
Less: Dividends	22000
Retained earnings, ending balance	150400