Question

Use the following information to prepare a multistep income statement and a balance sheet for Sherman Equipment Co. for 2016. (Hint: Some of the items will not appear on either statement, and ending retained earnings must be calculated.)(Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

Answer 1

INCOME STATEMENT

OF

Sherman Equipment Co. for 2016

Sales Revenue: $3,24,000

Less: COGS $1,49,000

= Gross Profit $ 1,75,000

Less: Operating Expenses $ 63,000

= Operating Income $ 1,12,000

Add: Non-operating others:

Interest Revenue $5,500

= Net Income $ 1,17,500

Sherman Equipment Co.

Balance Sheet As on 31st December 2016

EQUITIES AND LIABILITIES:

Stock holder's Equity:

Common Stock $ 1,00,000

Retained Earning (beginning Retained Eraning+ Net Income-dividend ) $ 1,85,400

Total Stock Holder's Equity $2,85,400

Long-Term liability: NILL

Current Liabilities:

Accounts Payable $ 47,000

Salary Payable $13,000

Total liability $ 3,45,400

ASSETS

FIXED ASSETS:

Land $41,000

CURRENT ASSETS:

Accounts Receivable: $ 57,000

Less: Allowance for Doubtful accounts $ (7,900)

Less: Uncollectable Accounts Expenses $(8,200)

Total = $ 40,900

Inventory $98,400

Cash $48,200

Interest Receivable (Short-term) $1,600

Notes Receivable (Short-term) $25,000

Prepaid Rent $ 12,600

LONG TERM INVESTMENT:

INTANGIBLE ASSETS:

TOTAL ASSETS $ 2,67,700