Question

Required:         Prepare a multiple-step income statement in good form. (Include EPS)

Calculate retained earnings as of December 31, 2018.

Prepare a classified balance sheet in good form.

Calculate working capital.

Thornhill Companies
Trial Balance
As of December 31, 2018
Cash		$                9,000		$                       -
Accounts Receivable		150,000
Inventory		100,000
Prepaid Rent Expense		18,000
Land		100,000
Plant		500,000
Equipment		1,000,000
Franchises		200,000
Dividends		25,000
Cost of Goods Sold		1,200,000
Selling Expenses		200,000
Administrative Expenses		250,000
Interest Expense		30,000
Income Taxes Expense		20,000
Accumulated Depreciation				250,000
Accounts Payable				98,000
Income Taxes Payable				5,000
Unearned Sales Revenues				74,000
Bonds Payable				600,000
Common Stock (100,000 shares)				750,000
Retained Earnings (January 1, 2018)				225,000
Sales				1,800,000
Total	0	$        3,802,000		$        3,802,000

Answer 1

Part A

Thornhill Companies

Income statement

For the Year Ended December 31 2018

Sales		1800000
Less: cost of goods sold		1200000
Gross profit		600000
Less: Operating expenses :
Selling expenses	200000
Administrative expenses	250000
Total operating expenses		450000
Operating income		150000
Other income (expenses)
Less: Interest expense		30000
Income before taxed		120000
Less: Income tax expense		20000
Net income		100000
Earnings per share (100000/100000shares)		1.00

Part B

Retained earnings (January 1, 2018)	225000
Add: Net income	100000
	325000
Less : dividends	25000
Retained earnings (December 31 2018)	300000

Part C

Thornhill Companies

Balance sheet

December 31, 2018

Assets
Current assets
Cash	9000
Accounts receivable	150000
Inventory	100000
Prepaid rent expense	18000
Total current assets		277000
Property, plant and equipment
Land	100000
Plant	500000
Equipment	1000000
Accumulated depreciation	(250000)
Total property plant and equipment		1350000
Other assets		1627000
Franchises		200000
Total assets		1827000
Liabilities and stockholders' equity
Current liabilities
Accounts Payable	98000
Income tax payable	5000
Total current liabilities		103000
Long term liabilities
Bonds payable	6000000
Unearned sales revenue	740000
Total long term liabilities		674000
Stockholders' equity
Common Stock	750000
Retained earnings	300000
Total stockholders' equity Total liabilities and stockholders' equity		1050000 1827000