Question

Sensor Corporation's capital structure consists of 50,000 shares of common stock. The accounts and their amounts per the 12/31/19 trial balance are listed below (except as noted). All adjusting journal entries have been made except for the accrual of income taxes (20% tax rate).

Accounts Payable                                             53,000

Accounts Receivable                                        105,000

Accrued Interest Payable                                  1,900

Accumulated Depreciation                                176,000

Allowance for Doubtful Accounts                      6,300

Cash                                                                 84,000

Common Stock                                                 250,000  

Dividend Revenue                                           10,000

Dividends Declared                                           37,500

General and Administrative Expenses            169,000

Interest Expense                                               13,500

Inventory, January 1, 2019                              131,000

Land                                                                 420,000

Loss on Discontinued Operations                   105,000

Machinery and Equipment                                468,000

Notes Payable (maturity 9/30/2025)                 155,250

Office Supplies                                                    22,000

Patents                                                               50,000

Purchase Discounts                                           11,000

Purchases                                                         723,000

Retained Earnings, January 1, 2019                 250,950

Sales                                                                 1,562,000

Selling Expenses                                                 157,000

Unearned Service Revenue                                   8,600

Note: The 12/31/19 inventory count was $194,000.

REQUIRED:

a.) Prepare a 2019 multi-step income statement; include EPS. Refer to the Cabrera Company (Illustration 4-2) and Poquito Industries (Illustration 4-8) examples in Chapter 4 of the text for format suggestions (also refer to Illustration 4-10). Many items in these format examples are not applicable to this homework problems.

b.) Prepare a 2019 Retained Earnings statement. Refer to the Stricker example (Illustration 4-19) in Chapter 4 of the text for format examples. No corrections for prior periods exist.

c.) Prepare a 12/31/19 balance sheet. Refer to the Scientific Products (Illustration 5-16) example in Chapter 5 of the text for format suggestions. Many items in this example are not applicable to this homework problem.

Answer 1

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Sensor Corporation's
Multi Step Income Statement for the year ended December 31.
Particulars	Amount $	Amount $
Sales Revenue	1,562,000.00
Less: returns and allowances
Net Sales		1,562,000.00
Cost of goods sold
Inventory, January 1, 2019	131,000.00
Add: Purchases	723,000.00
Less: Purchase Discount	(11,000.00)
Less: Inventory, Dec 31, 2019	(194,000.00)	649,000.00
Gross Profit		913,000.00
General and Administrative Expenses	169,000.00
Selling Expenses	157,000.00
Operating Expense		326,000.00
Operating Income		587,000.00
Dividend revenue	10,000.00
Interest expense	(13,500.00)
Other expense and income		(3,500.00)
Income before tax		583,500.00
Tax expense		116,700.00
Net Income from continuing operations		466,800.00
Loss on Discontinued Operations -net of tax		(84,000.00)
Net Income		382,800.00
Statement of Retained Earnings for the year ended December 31	Amount $
Opening Balance	250,950.00
Add: Net Income for the year	382,800.00
Less: Dividend	37,500.00
Closing Balance	596,250.00
Balance Sheet as at December 31
Assets	Amount $	Amount $
Cash		84,000.00
Office Supplies		22,000.00
Accounts Receivable	105,000.00
Allowance for Doubtful Accounts	(6,300.00)	98,700.00
Inventory, Dec 31, 2019		194,000.00
Total Current Assets		398,700.00
Property, plant & equipment, net
Land		420,000.00
Machinery and Equipment	468,000.00
Accumulated Depreciation	(176,000.00)	292,000.00
Property, plant & equipment, net		712,000.00
Patents		50,000.00
Total Assets		1,160,700.00
Liabilities & Stockholders' Equity
Liabilities	Amount $	Amount $
Accounts Payable	53,000.00
Accrued Interest Payable	1,900.00
Taxes Payable	95,700.00
Unearned Service Revenue	8,600.00
Current Liabilities		159,200.00
Notes Payable	155,250.00
Long Term Liabilities		155,250.00
Total Liabilities		314,450.00
Stockholders' Equity
Common Stock	250,000.00
Retained Earnings	596,250.00
Total Stockholders' Equity		846,250.00
Total Liabilities & Stockholders' Equity		1,160,700.00