Question

2.     a) Using the following information for Campbell Enterprises, prepare an annual:

                   Multiple-step income statement

                   Retained earnings statement

                   Classified balance sheet (7 points)

b) Using the above information, compute Campbell’s gross profit rate. Please show the details of

            your computation: (1 point)

Gross profit rate            ____________________________________________

Campbell Enterprises, Inc.

Adjusted Trial Balance

December 31, 2019

                                                                                         Debit                    Credit

Cash                                                                   4,000

Accounts Receivable                                       15,000

Inventory                                                         30,000

Prepaid Insurance                                              4,000

Supplies                                                             3,000

Long-term Investment in Stock                         6,000

Land                                                                 20,000

Buildings                                                       120,000

Accumulated Depreciation—

Buildings                                                                                     20,000

Patents                                                             10,000

Accounts Payable                                                                          10,000

Unearned Revenue                                                                          2,000

Bonds Payable (due in 2023)                                                         20,000

Common Stock                                                                              80,000

Retained Earnings                                                                          44,000

Dividends                                                         30,000

Sales Revenue                                                                              305,000

Interest Revenue                                                                              5,000

Sales Discounts                                                  6,000

Sales Returns & Allowances                             8,000

Cost of Goods Sold                                        188,000

Salaries and Wages Expense                           21,000

Depreciation Expense                                      10,000

Utilities Expense                                                5,000

Insurance Expense                                             3,000

Supplies Expense                                               2,000

Interest Expense                                               1,000                                    

                                                                       486,000                 486,000

Answer 1

Answer-2)-a)-

CAMPBELL ENTERPRISES
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31,2019
PARTICULARS		AMOUNT
		$
Net sales revenue		291000
Sales revenue	305000
Less- Sales discounts	6000
Less- Sales returns & allowances	8000
Less-Cost of goods sold		188000
Gross profit		103000
Less-Operating expenses
Utilities expenses	5000
Salaries & wages expenses	21000
Depreciation expenses	10000
Insurance expense	3000
Supplies expense	2000
Total operating expenses		41000
Operating income		62000
Add- Other income & gains		4000
Interest revenue	5000
Less- Interest expense	1000
Net Profit		66000

STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31,2019		Amount
		$
Opening Retained earnings balance		44000
Add- Net Income		66000
Less- Dividends		30000
Ending Retained earnings balance		80000

CAMPBELL ENTERPRISES
BALANCE SHEET
DECEMBER 31,2019
Assets		Amount
Current Assets		56000
Cash	4000
Inventory	30000
Accounts receivable	15000
Prepaid insurance	4000
Utilities	3000
Non Current Assets
Building	120000
Less- Accumulated depreciation	20000	100000
Land		20000
Intangible Assets
Patent		10000
Long-term Assets
Long-term investments in Stock		6000
Total Assets		192000
Liabilities
Current liabilities		12000
Accounts payable	10000
Unearned revenue	2000
Long-term liabilities
Bonds payable		20000
Owner's capital		160000
Common stock	80000
Retained earnings	80000
Total liabilties and owner's capital		192000

b)-Gross profit rate= (Gross profit/Net Sales)*100

= ($103000/$291000)*100

= 35.40%