Question

JackJoe, Inc. sells toy mice to high end pet stores. It was formed on Jan 1, 20x4 with a sale of $1 par value common stock and the issuance of a Bond. Following is JackJoe's trial balance after the first year of operation, through December 1 20x4. This trial balance does not reflect the transactions that occurred during the last month of the year or adjustments that are necessary, as described by the additional information. The Bond payable was sold on Jan 1 20X4 and is due in 4 years, interest of 7% is payable annually on Dec. 31.
	JackJoe, Inc.
	Trial Balance
	As of December 1, 20X4
			Debits		Credits
		Cash	$ 19,000		$ -
		Accounts receivable	12,000		-
		Supplies	5,000		-
		Inventory	25,000		-
		Equipment	30,000		-
		Accumulated depreciation	-		-
		Accounts payable	-		10,000
		Bond payable	-		32,000
		Premium on bond			400
		Interest payable	-		-
		Capital stock ($1 par)	-		25,000
		Additional paid in capital			-
		Dividend	-		-
		Sales	-		64,000
		Sales - Discounts	-		-
		Cost of goods sold	-		-
		Rent expense	16,400		-
		Salaries expense	24,000		-
		Depreciation expense	-		-
		Supplies expense	-		-
		Interest expense	-		-
			$ 131,400		$ 131,400
1. JackJoe's president, Elizabeth, decided the company needed more capital, so she sold 10,000 shares of stock on December 22th for $19,000
2. JackJoe received payment to settle a $12,000 Account receivable on December 21. The terms of the receivable were 3/10, N 30 and the payment reflected that it was within the discount period.
3. JackJoe sold $25,000 of toy mice, on December 22. The terms of the sale were 2/10, N 30. JackJoe uses a periodic inventory system.
4. JackJoe performed a physical inventory at yearend and no inventory remained. JackJoe's accounting policy is FIFO periodic.
5. The equipment was purchased near the beginning of the year. It has a 3 year life with no salvage value
6. Record the first interest payment on the bond.
7. Supplies on hand at year end were counted, and amount to $200.
8. The board of directors declared a dividend of 50 cents per share on Dec. 31. The date of record is Jan 15, 20x5 and the payment date is Feb 1, 20x5. question is Prepare the multi-step income statement, statement of retained earnings and classified balance sheet with a detailed stockholders' equity section

Answer 1

1. Multi-step income statement -

Income Statement JackJoe, Inc. as of December 31, 20X4
Particulars	$
Sales	$      89,000
Sales - Discounts	$            360
Cost of goods sold	$      25,000
Gross Profit	$      63,640
Expenses	$                -
Rent expense	$      16,400
Salaries expense	$      24,000
Depreciation expense	$      10,000
Supplies expense	$         4,800
Interest expense	$         2,240
Total Expenses	$      57,440
Net Profit	$         6,200

2. Statement of retained earnings

Equity	1/12/2014	Decrease	Increase	31/12/14
Capital stock ($1 par)	$      25,000		$         10,000	$         35,000
Additional paid in capital			$            9,000	$            9,000
Dividend		$        10,000		$       (10,000)
Retained Earnings - Net Profit	$      23,600		$       (17,400)	$            6,200
Total Equity	$      48,600	$        10,000	$            1,600	$         40,200

3.  classified balance sheet with a detailed stockholders' equity section

Balance Sheet JackJoe, Inc. as of December 1, 20X4
Particulars	$
Non-current Asset
Equipment	$      30,000
Accumulated depreciation	$    (10,000)
Total Non Current Assets	$      20,000
Current Assets
Cash	$      49,640
Accounts receivable	$      25,000
Supplies	$            200
Inventory	$               -
Total Current Assets	$      74,840
Total Assets	$      94,840
Equity
Capital stock ($1 par)	$      35,000
Additional paid in capital	$        9,000
Dividend	$    (10,000)
Retained Earnings - Net Profit	$        6,200
Total Equity	$      40,200
Non Current Liabilities
Bond payable	$      32,000
Premium on bond	$            400
Total Non Current Liabilities	$      32,400
Current Liabilities
Accounts payable	$      10,000
Interest payable	$        2,240
Dividend Payable	$      10,000
Total Current Liabilities	$      22,240
Total Equity and Liabilities	$      94,840