Question

Sheffield Corp.’s balance sheet at December 31, 2021, is presented below. SHEFFIELD CORP. Balance Sheet December 31, 2021 Cash $51,660 Accounts payable $53,760 Accounts receivable 95,550 Common stock ($10 par) 168,000 Allowance for doubtful accounts (3,150 ) Retained earnings 267,540 Supplies 9,240 Land 84,000 Buildings 298,200 Accumulated depreciation—buildings (46,200 ) $489,300 $489,300 During 2022, the following transactions occurred. 1. On January 1, Sheffield issued 2,520 shares of $40 par, 7% preferred stock for $103,320. 2. On January 1, Sheffield also issued 1,890 shares of the $10 par value common stock for $44,100. 3. Sheffield performed services for $672,000 on account. 4. On April 1, 2022, Sheffield collected fees of $75,600 in advance for services to be performed from April 1, 2022, to March 31, 2023. 5. Sheffield collected $579,600 from customers on account. 6. Sheffield bought $73,710 of supplies on account. 7. Sheffield paid $67,620 on accounts payable. 8. Sheffield reacquired 840 shares of its common stock on June 1 for $28 per share. 9. Paid other operating expenses of $395,220. 10. On December 31, 2022, Sheffield declared the annual preferred stock dividend and a $1.20 per share dividend on the outstanding common stock, all payable on January 15, 2023. 11. An account receivable of $3,570 which originated in 2022 is written off as uncollectible. Adjustment data: 1. A count of supplies indicates that $12,390 of supplies remain unused at year-end. 2. Recorded revenue from item 4 above. 3. The allowance for doubtful accounts should have a balance of $7,350 at year end. 4. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $21,000. 5. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)

Answer 1