Question

Problem 1. Balance sheet and statement of cash flows preparation

A. Prepare an income statement (multiple step), balance sheet and cash flow statement using the selected financial statement information and additional data for Stanislaus Co. presented below.

Balance sheet:

                                                 December 31 2015

Cash..........................................................     $52,000                                               

Accounts receivable (net)...........................       64,000                                               

Inventory..................................................     178,000                                               

Land..........................................................       78,800                                               

Equipment.................................................     504,000                                                   

TOTAL............................................ $876,800                                               

Accumulated depreciation..........................     $94,000                                               

Accounts payable.......................................       50,400                                               

Notes payable - short-term........................       67,200                                               

Notes payable - long-term..........................     178,000                                               

Common stock...........................................     420,000                                               

Retained earnings......................................       67,200                                               

TOTAL............................................ $876,800                         

Trial balance

December 31, 2016

.................................................................      DR                CR

Cash..........................................................     $60,000                                               

Accounts receivable (net)...........................       75,000                                               

Allowance for doubtful accounts…………………………….4,500

Inventory..................................................     148,000                                               

Land..........................................................       58,800                                               

Equipment.................................................     620,000                                                   

              Accumulated depreciation..........................                      40,000                                 

Accounts payable.......................................                      see below                        

Notes payable - short-term........................                      24,200                              

Notes payable - long-term..........................                     154,000                             

Common stock...........................................                     420,000                             

Retained earnings......................................                        67,200

Sales revenue............................................ see below

Cost of goods sold……………………………………….see below

Salary expense…………………………………………….see below

Advertising expense……………………………………see below

Depreciation expense………………………………….see below

Bad debt expense……………………………………….see below

Other expense…………………………………………….see below

Additional data for 2016:

1.    Land was sold at its original cost.

2.    Equipment was purchased

3.    Notes were repaid

2016 balances
	DR	CR
Accounts payable		48,300
Sales revenue		630,500
Cost of goods sold	285,000
Salary expense	95,000
Advertising expense	14,600
Depreciation	10,000
Bad debt	2,500
Other expenses	20,000

Answer 1

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Balance Sheet as on December 31 2016
Cash		$         60,000
Accounts Receivable	$         75,000
Allowance for doubtful accounts	$          -4,500
Accounts Receivable,Net		$         70,500
Inventory		$       148,000
Total Current Assets		$       278,500
Land		$         58,600
Equipment	$       620,000
Accumulated Depreciation	$        -40,000
Equipment, Net		$       580,000
Total Assets		$       917,100
Accounts payable	$         48,300
Notes payable - short-term	$         24,200
Total Current Liabilities		$         72,500
Notes payable - long-term		$       154,000
Total Liabilities		$       226,500
Common stock.		$       420,000
Retained Earning (67200+203400 Net Income)		$       270,600
Total Liabilities and Equities		$       917,100
Cash Flow
Net Income		$       203,400
Adjustment to Net income:
Depreciation Expenses		$        -54,000
Increase in Receivable		$          -6,500
Decerease in inventory		$         30,000
Decrease in Accounts Payable		$          -2,100
Decrease in Note Payable		$        -43,000
Net Cash flow from Operating Activities		$       127,800
Cash flow from Investing activities:
Sale of Land		$         20,200
Purchase of Equipment		$     -116,000
Net Cash from Investing Activities		$        -95,800
Cash flow from financing activities:
Repayent of Note Payment		$        -24,000
Net Cash from Financing Activities		$        -24,000
Net Increase in Cash		$            8,000
Add: Beginning Balance		$         52,000
Ending Balance		$         60,000
Working Net Income:
Sales Revenue		$       630,500
Cost of Goods Sold		$       285,000
Gross Margin		$       345,500
Less:
Salary Expense	$         95,000
Advertising Expense	$         14,600
Depreciation Expense	$         10,000
Bad debt expense	$            2,500
Other Expense	$         20,000	$       142,100
Net Income		$       203,400