Question

PREPARE: MULTIPLE-STEP INCOME STATEMENT, RETAINED EARNINGS, AND BALANCE SHEET

MotionWork Destiny Inc.
Adjusted Trial Balance
December 31, 2016
Cash	34,000
Petty Cash	900
Accounts Receivable	159,000
Allowance for Doubtful Accounts		5,400
Notes Receivable (due 4/20/2017)	40,000
Inventory	72,000
Estimated Returns Inventory	26,700
Supplies	2,000
Prepaid Insurance	4,800
Land	100,500
Equipment	450,000
Accumulated Depreciation		70,700
Accounts Payable		63,150
Salaries Payable		13,600
Customers Refunds Payable		48,325
Income Tax Payable		21,070
Bonds Payable, Due 12/31/2018		230,000
Premium on bonds payable		2,000
Common Stock, $2 par, 100,000 shares authorized		88,000
Paid in Capital in excess of par—Common stock		8,500
Treasury Stock-common, 550 shares at cost	55,000
Retained Earnings, 1/1/2016		393,300
Cash Dividends	11,000
Sales		2,210,005
Cost of Goods Sold	1,582,250
Selling Expense	356,200
Administrative Expenses	242,700
Interest Revenues		4,000
Interest Expense	14,800
Income taxes expense	6,200
	3,158,050	3,158,050

Answer 1

Preparing Multiple Step Income Statement, Retained Earnings Statement and Balance Sheet:-

MOTION WORK DESTINY INC.

Multiple Step Income Statement

For the Year Ended December 31,2016

Accounts	Amount	Amount
Sales	$2,210,005
Less:- Cost of Goods Sold	(1,582,250)
Gross Profit		$627,755
Less:- Operating Expenses
Selling Expense	$356,200
Administrative Expenses	242,700
Total Operating Expenses		($598,900)
Operating Income		$28,855
Non Operating and Others :-
Interest Revenue	$4,000
Interest Expense	(14,800)
Total Non Operating and Others		($10,800)
Income Before Taxes		$18,055
Less:- Income Taxes Expense		(6,200)
Net Income		$11,855

MOTION WORK DESTINY INC.

Retained Earnings Statement

For the Year Ended December 31,2016

Accounts	Amount
Retained Earnings,1/1/2016	$393,300
Add:- Net Income	11,855
	$405,155
Less:- Cash Dividends	(11,000)
Retained Earnings, 12/31/2016	$394,155

MOTION WORK DESTINY INC.

Balance Sheet

December 31,2016

Accounts	Amount	Amount
Assets:-
Current Assets:-
Cash	$34,000
Petty Cash	900
Accounts Receivable	159,000
Less:- Allowance for Doubtful Accounts	(5,400)
Notes Receivable (due 4/20/2017)	40,000
Inventory	72,000
Estimated Returns Inventory	26,700
Supplies	2,000
Prepaid Insurance	4,800
Total Current Assets		$334,000
Property, Plant and Equipment:-
Land	$100,500
Equipment	450,000
Less:- Accumulated Depreciation	(70,700)
Total Property, Plant and Equipment		$479,800
Total Assets		$813,800
Liabilities and Stockholders Equity:-
Current Liabilities:-
Accounts Payable	$63,150
Salaries Payable	13,600
Customer Refunds Payable	48,325
Income Tax Payable	21,070
Total Current Liabilities		$146,145
Long-term Liabilities:-
Bonds Payable (Due 12/31/2018)	$230,000
Premium on Bonds Payable	2,000
Total Long-term Liabilities		$232,000
Stockholders Equity:-
Common Stock, $2 par, 100,000 shares authorized	$88,000
Paid in Capital in Excess of Par - Common Stock	8,500
Less:- Treasury Stock - Common, 550 shares at cost	(55,000)
Retained Earnings, 12/31/2016	394,155
Total Stockholders Equity		$435,655
Total Liabilities and Stockholders Equity		$813,800