Question

Your company prepared the following alphabetical trial balances (adjusting entries for the end of the year have already been made) as of December 31, 2016:

                                                                                                 Debit              Credit  

                                                                                              Balances          Balances

Accounts Payable                                                                                          $15,106

Accounts Receivable                                                               $9,163

Accumulated Depreciation ‑ Equipment                                                         38,266

Advertising Expense                                                                  6,216

Allowance for Doubtful Accounts                                                                       604

Bad Debts Expense                                                                       663

Bonds Payable (due in 2020, 7% interest)                                                       50,000

Cash                                                                                           5,180

Cash Dividend Declared                                                               750

Cash Dividend Payable                                                                                        375

Common Stock, $10 par (10,000 shares authorized)                                      15,000

Cost of Goods Sold                                                                  52,128

Depreciation Expense                                                              11,945

Equipment                                                                             159,377

Gain on Sale of Assets                                                                                       1,274

Held to Maturity Securities                                                       5,000

Income Tax Expense                                                                  ? ? ?

Income Tax Payable                                                                                           ? ? ?

Insurance Expense                                                                     1,200

Interest Expense                                                                        3,100

Interest Income                                                                                                     290

Interest Payable                                                                                                 1,500

Loss From Discontinued Operations                                         7,200

Merchandise Inventory                                                            13,460

Paid in Capital in Excess of Par ‑ Common                                                    28,060

Premium on Bonds Payable                                                                              2,000

Premium on Held to Maturity Securities                                      300

Prepaid Insurance                                                                         200

Retained Earnings, January 1                                                                          21,077

Rent Expense                                                                             9,450

Research and Development Expense                                        3,572

Sales                                                                                                               132,712

Utilities Expense                                                                        5,643

Wages Expense                                                                        12,193

Wages Payable                                                                                                     476

TOTAL                                                                                     $$$$$              $$$$$

                                                                                              ══════            ═════

INSTRUCTIONS: Based upon the above list, use a computer spreadsheet to prepare the FORMAL multiple step income statement (including earnings per share, assuming that no stock was purchased or sold during the year), retained earnings statement, and classified balance sheet for your company for the year ended December 31, 2016.  Assume a 34% tax rate on all items.  Round all amounts on financial statements to the nearest dollar but report earnings per share to the nearest penny.  You do not have to do a cash flow statement for this assignment, but you will be doing one in future assignments.

Answer 1

			Income Statement
						$	$
	Sales						132712
	Less:Cost of goods sold						52128
	Gross profit						80584
	Less: Operating expenses
	Advertising expenses					6216
	Bad Debts Expense					663
	Depreciation Expense					11945
	Insurance Expense					1200
	Rent Expense					9450
	Research and Development Expense					3572
	Utilities Expense					5643
	Wages Expense					12193	50882
	Operating income						29702
	Non-operating or other
	Gain on Sale of Assets					1274
	Interest Expense					-3100
	Interest Income					290
	Loss From Discontinued Operations					-7200	-8736
	Income before taxes						20966
	Less: Tax at 34%						7128
	Net income						13838
			Retained earnings statement
							$
	Beginning balance						21077
	Add: Net income						13838
							34915
	Cash Dividend Declared						750
	Ending balance						34165
			Balance Sheet
	Assets					$	$
	Current Assets:
	Cash						5180
	Accounts receivable					9163
	Less: Allowance for doubtful accounts					604	8559
	Held to Maturity Securities (Assumed to be current)						5000
	Merchandise Inventory						13460
	Premium on Held to Maturity Securities						300
	Prepaid Insurance						200
	Total current assets (A)						32699
	Property,Plant and Equipment:
	Equipment					159377
	Less: Accumulated depreciation					38266	121111
	Total assets						153810
	Liabilities and Stockholder's equity
	Liabilities
	Current liabilities:
	Accounts payable						15106
	Cash Dividend Payable						375
	Interest payable						1500
	Wages Payable						476
	Income tax payable						7128
	Total Current Liabilities						24585
	Long-term liabilities:
	Bonds Payable (due in 2020, 7% interest)						50000
	Premium on Bonds Payable						2000
	Total Long-term liabilities						52000
	Stockholder's Equity:
	Common Stock, $10 par (10,000 shares authorized)						15000
	Paid in Capital in Excess of Par ‑ Common						28060
	Retained earnings						34165
	Total Stockholder's Equity						77225
	Total Liabilities and Stockholder's equity						153810