is the adjusted trial balance for Dulcinea Corporation at December 31, 2017. Dulcinea CorporationTrial BalanceDecember 31,...

is the adjusted trial balance for Dulcinea Corporation at December 31, 2017. Dulcinea CorporationTrial BalanceDecember 31, 2017DebitCreditCash$26,300 Accounts receivable19,000 Inventory23,000Office supplies700 Prepaid insurance2,400 Land75,000 Building, net153,000 Trademark7,000 Accounts payable46,875 Wages payable12,000 Interest payable 1,250Note payable (due in 4 years) 100,500 Capital stock45,000 Retained earnings66,000 Dividends 4,000 Sales Revenue233,000 Cost of goods sold93,200Selling expenses37,000 Administrative expenses42,400 Interest expense5,025 Income tax expense16,600 $504,625$504,625 Required (15 points):a. Prepare the financial statements for Dulcinea Corporation, including a multiple step income statement, Statement of Stockholders’ Equity and a classified balance sheet. Do not prepare the Statement of Cash Flows. b. Calculate the Current Ratio for Dulcinea Corporation.

Expert Solution

Dulcinea Corporation
Multiple Step Income Statement
31st December 2017

Revenues
Net Sales		$ 233,000.00
Cost of Goods Sold		$ 93,200.00

Gross Profit		$ 139,800.00

Operating Expense:
Selling Expense	$ 37,000.00
Administrative expenses	$ 42,400.00
Total Operating Expense:		$ 79,400.00
Income from Operations		$ 60,400.00
Other Revenue and Expense
Interest Expense		$ 5,025.00
Income before taxes		$ 55,375.00
Income tax expense		$ 16,600.00
Net Income		$ 38,775.00

Dulcinea Corporation
the statement of stockholders equity
31st December 2017
	Common Stock	Retained earnings	Total Stockholders equity
Beginning Balance	$ 45,000.00	$ 66,000.00	$ 111,000.00
Issuance of common stock
Net income		$ 38,775.00	$ 38,775.00
Dividend		$ (4,000.00)	$ (4,000.00)
Closing Balance	$ 45,000.00	$ 100,775.00	$ 145,775.00

Dulcinea Corporation
Classified Balance Sheet
31st December 2017
Assets
Current Assets
Cash	$ 26,300.00
Accounts Receivable	$ 19,000.00
Inventory	$ 23,000.00
Office Supplies	$ 700.00
Prepaid Insurance	$ 2,400.00
Total Current Assets		$ 71,400.00

Non Current Assets
Land	$ 75,000.00
Building, net	$ 153,000.00
Trademark	$ 7,000.00
Total Non Current Assets		$ 235,000.00
TOTAL ASSETS		$ 306,400.00

Liabilities and Equity
Current Liabilities
Accounts Payable	$ 46,875.00
Wages payable	$ 12,000.00
Interest payable	$ 1,250.00
Total Current Liabilities		$60,125.00
Note payable (due in 4 years)		$ 100,500.00
Equity
Common Stock	$ 45,000.00
Retained Earnings	$ 100,775.00
Total Equity		$ 145,775.00
TOTAL LIABILITIES AND EQUITY		$ 306,400.00

b)

Current ratio=Current Assets/Current Liabilites

=71400/60125

=1.19

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