Question

The following list includes all of the account balances from Blue and White Company's general ledger on December 31, 2020, after all the adjusting entries have been posted. The accounts are listed in alphabetical order, and all accounts have a normal balance. This was Blue and White Company's first year in business.

Instructions: Using the information provided above, prepare a multiple-step income statement, statement of owner's equity, and classified balance sheet for Blue and White Company for the fiscal year ending December 31, 2020. Enter your answer in the space provided below on Connect. The accounts in your financial statements should be in the proper format, but you do not need to align amounts in neat columns. DO NOT ABBREVIATE ACCOUNT TITLES.

Accounts payable	$24,499
Accounts receivable	35,689
Accumulated depreciation-machinery	15,000
Allowance for doubtful accounts	3,456
Cash	65,400
Cost of goods sold	458,985
General and administrative expenses	56,804
Interest expense	13,875
Machinery	150,000
Merchandise inventory	50,789
Notes payable (due June 30, 2025)	125,000
Office supplies	421
Prepaid rent	687
S. Jones, Capital	67,941
S. Jones, Withdrawals	35,000
Sales	658,725
Sales returns and allowances	25,980
Sales tax payable	690
Selling expenses	2,486
Unearned revenue	805

Answer 1

Multistep Income Statement
Sales		658,725
Sales returns and allowances		-25,980
Net sales		632,745
Cost of goods sold		-458,985
Gross profit		173,760
Operating expenses:
General and administrative expenses	56,804
Selling expenses	2,486
Total Operating expenses		-59,290
Operating Profit		114,470
Other income and expenses
Interest expense		-13,875
Net Income		$100,595

Statement of Owners Equity
S. Jones, Capital, beginning		67,941
Add: Net income	100,595
Less: S. Jones, Withdrawals	-35,000
		65,595
S. Jones, Capital, ending		$133,536

Balance Sheet
Assets		Amount
Current Assets:
Cash	65,400
Merchandise inventory	50,789
Accounts receivable                             35,689
Less: Allowance for doubtful accounts -3,456	32,233
Office Supplies	421
Prepaid rent	687
Total Current Assets		149,530
Plant,Assets :
Machinery	150,000
Less:Accumulated Depreciation- machinery	-15,000
Total plant asset		135,000
Total Assets		284,530
Liabilities and Owners Equity
Current Liabilities:
Accounts payable	24,499
Unearned revenue	805
Sales tax payable	690
Total Current liabilities		25,994
Long term Liabilities:
Notes payable	125,000
Total Long term Liabilities		125,000
Owners Equity:
S. Jones, Capital, ending	133,536
Total stockholders equity		133,536
Total Liabilities & Owners Equity		284,530

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