Question

You are provided with the following information for Sandhill Co., effective as of its April 30, 2022, year-end.

Accounts payable		$ 852
Accounts receivable		850
Accumulated depreciation—equipment		690
Cash		1,230
Common stock		16,100
Cost of goods sold		1,070
Depreciation expense		315
Dividends		400
Equipment		2,450
Goodwill		1,900
Income tax expense		170
Income taxes payable		150
Insurance expense		380
Interest expense		480
Inventory		980
Investment in land		12,870
Land		3,500
Mortgage payable (long-term)		4,300
Notes payable (short-term)		63
Prepaid insurance		70
Retained earnings (beginning)		1,300
Salaries and wages expense		850
Salaries and wages payable		260
Sales revenue		5,200
Stock investments (short-term)		1,400

a.Prepare an income statement for Sandhill Co. for the year ended April 30, 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

b.Prepare an income statement for Sandhill Co. for the year ended April 30, 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

c.Prepare a classified balance sheet for Sandhill Co. as of April 30, 2022. (List Current Assets in order of liquidity.)

Answer 1

a) Sandhill Co.

Income Statement

For the Year Ended April 30, 2022 (Amounts in $)

Sales Revenue	5,200
Less: Cost of Goods Sold	(1,070)
Gross Margin	4,130
Expenses:
Depreciation Expense	(315)
Insurance Expense	(380)
Salaries and Wages expense	(850)
Interest Expense	(480)
Earning before income tax	2,105
Less: Income tax expense	(170)
Net Income	1,935

b) Classified balance sheet for Sandhill Co. is shown as follows:-

Sandhill Co.

Balance Sheet

As of April 30, 2022 (Amounts in $)

Assets
Current Assets
Cash	1,230
Stock Investments (Short-term)	1,400
Accounts Receivable	850
Inventory	980
Prepaid Insurance	70
Total Current Assets (A)	4,530
Fixed Assets
Tangible Assets
Equipment	2,450
Accumulated Depreciation-Equipment	(690)
Net Book Value (i)	1,760
Land (ii)	3,500
Intangible Assets
Goodwill (iii)	1,900
Total Fixed Assets [B = (i)+(ii)+(iii)]	7,160
Investment in Land (C)	12,870
Total Assets (A+B+C)	24,560
Liabilities and Owner's Equity
Current Liabilities
Accounts Payable	852
Income Taxes Payable	150
Notes payable (short-term)	63
Salaries and wages payable	260
Total Current Liabilities (D)	1,325
Long-term Liabilities
Mortgage payable (long-term) (E)	4,300
Owner's Equity
Common Stock (iv)	16,100
Retained Earnings
Beginning Balance	1,300
Add: Net Income	1,935
Less: Dividends	(400)
Ending Balance (v)	2,835
Total Owner's Equity [F = (iv)+(v)]	18,935
Total Liabilities and Owner's Equity (D+E+F)	24,560

Notes:-

1) Retained Earnings ending balance is equal to beginning balance plus net income less dividends.