Question

The following items are taken from the financial statements of Super Company for 2019:

Cash 26,000

Common Stock 25,000

Cost of Goods Sold 17,000

Depreciation Expense 4,800

Dividends 5,300

Equipment 44,000

Interest Expense 2,500

Rent Expense 2,000

Patents 7,500

Note Payable (Due 2020) 3,000

Retained Earnings, January 1 16,000

Salaries Expense 5,200

Sales Revenue 35,500

Accounts Payable 18,500

Rent Payable 2,000

Accounts Receivable 4,000

Accumulated Depreciation 4,800

Bonds Payable 18,000

Supplies 4,500

Instructions: Prepare the following statements

a) Multistep income statement

b) Retained earnings

c) Classified Balance Sheet

Answer 1

a)

Super Company
Income Statement
For the year ended December 31, 2019
Revenues
Sales		$     35,500
LessL Cost of goods sold		$     17,000
Gross profit		$     18,500
Less: Operating expenses
Depreciation Expense	$        4,800
Rent Expense	$        2,000
Salaries Expense	$        5,200
Total operating expense		$     12,000
income from operations		$        6,500
Non operating income and (expenses)
Interest expenses		$     (2,500)
Net income		$        4,000

b)

Super Company
Statement of Retained Earnings
For the year ended December 31, 2019
Retained earnings, Beginning	$     16,000
Add: Net income	$        4,000
	$     20,000
Less: Dividends	$     (5,300)
Retained earnings, Ending	$     14,700

c)

Super Company
Balance Sheet
At December 31, 2019
Assets
Cash	$   26,000
Accounts Receivables	$     4,000
Supplies	$     4,500
Total current assets		$   34,500
Property, Plant and Equipment
Equipment	$   44,000
Building	$   (4,800)
Total property, plant and equipment		$   39,200
Intangible assets
Patents		$     7,500
Total Assets		$   81,200
Liabilities and stockholders equity
Current Liabilities
Accounts payable	$   18,500
Note payable	$     3,000
Rent payable	$     2,000
Total current liabilities		$   23,500
Non-current liabilities
Bonds payable, Long term		$   18,000
Total liabilities		$   41,500
Shareholders' equity
Common stock	$   25,000
Retained earnings	$   14,700
Total Shareholders' equity		$   39,700
Total liabilities and shareholders' equity		$   81,200

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