Question

Riley Incorporated reports the following amounts at the end of the year (all amounts in $000): Cash $16,140 Product Revenues $112,500 Depreciation Expense 3,210 Mortgage Payable 38,000 Taxes Payable 1,020 Treasury Stock 650 Buildings 79,000 Salaries 62,800 Land 40,000 Accumulated Depreciation 21,730 Current Portion - Notes and Mortgage Payable 2,200 Accounts Payable 18,500 Equipment 42,000 Net Accounts Receivable 23,500 Income Tax Expense 3,650 Discounts on Notes Payable 7,950 Interest Expense 4,000 Inventory 6,400 Notes Payable 25,650 Costs of Goods Sold 17,400 Utilities 350 License Revenues 250 Advertising Expense 11,300 Short Term Investments (Securities) 2,500 Prepaid Expense 900 Wages Payable 3,200 In addition, the company had common stock of $75,000 at the beginning of the year and issued an additional $5,000 during the year. The company also had retained earnings of $20,700 at the beginning of the year and declared/paid dividends of $2,000 during the year. Prepare the income statement, statement of stockholders’ equity, and balance sheet.

Answer 1

• All working forms part of the answer
• Income Statement

Income Statement
Revenues
Product revenues	112500
Licence Revenues	250
Total Revenues (A)	112750
Expenses
Salaries	62800
Discount on Notes Payable	7950
Interest expense	4000
Depreciation expenses	3210
Income Tax Expenses	3650
Cost of Goods Sold	17400
Utilities	350
Advertising Expenses	11300
Total Expenses (B)	110660
Net Income (A-B)	2090

• Stockholders’ Equity

Statement of Stockholder's Equity
	Common Stock	Retained Earning
Opening Balance	75000	20700
Add: Issue	5000
Add: Net Income		2090
Less: Dividend		(2000)
Closing Balance	80000	20790

• Balance Sheet

Balance Sheet
A. Stockholder's Equity
Common Stock	80000
Retained Earning	20790
Treasury Stock	(650)	100140
B. Liabilities
Mortgage Payable	38000
Taxes Payable	1020
Notes & Mortgage payable	2200
Accounts payable	18500
Notes Payable	25650
Wages Payable	3200	88570
Total Stockholders' Equity and Liabilities		188710
C. Assets
Equipment	42000
Building	79000
Land	40000
Accumulated Depreciation	(21730)	139270
Net Accounts Receivables	23500
Cash	16140
Inventory	6400
Short Term Investments	2500
Prepaid Expense	900	49440
Total Assets		188710