Question

Comprehensive Accounting Cycle Review

15.ACR  Quigley Corporation's trial balance at December 31, 2020, is presented below. All 2020 transactions have been recorded except for the items described below.

	Debit	Credit
Cash	$  25,500
Accounts Receivable	51,000
Inventory	22,700
Land	65,000
Buildings	95,000
Equipment	40,000
Allowance for Doubtful Accounts		$      450
Accumulated Depreciation—Buildings		30,000
Accumulated Depreciation—Equipment		14,400
Accounts Payable		19,300
Interest Payable		-0-
Dividends Payable		-0-
Unearned Rent Revenue		8,000
Bonds Payable (10%)		50,000
Common Stock ($10 par)		30,000
Paid-in Capital in Excess of Par—Common Stock		6,000
Preferred Stock ($20 par)		-0-
Paid-in Capital in Excess of Par—Preferred Stock		-0-
Retained Earnings		75,050
Treasury Stock	-0-
Cash Dividends	-0-
Sales Revenue		570,000
Rent Revenue		-0-
Bad Debt Expense	-0-
Interest Expense	-0-
Cost of Goods Sold	400,000
Depreciation Expense	-0-
Other Operating Expenses	39,000
Salaries and Wages Expense	65,000
Total	$803,200	$803,200

Unrecorded transactions and adjustments:

• 1.On January 1, 2020, Quigley issued 1,000 shares of $20 par, 6% preferred stock for $22,000.
• 2.On January 1, 2020, Quigley also issued 1,000 shares of common stock for $23,000.
• 3.Quigley reacquired 300 shares of its common stock on July 1, 2020, for $49 per share.
• 4.On December 31, 2020, Quigley declared the annual cash dividend and a $1.50 per share dividend on the outstanding common stock, all payable on January 15, 2021.
• 5.Quigley estimates that uncollectible accounts receivable at year-end is $5,100.
• 6.The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,000.
• 7.The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $4,000.
• 8.The unearned rent was collected on October 1, 2020. It was the receipt of 4 months' rent in advance (October 1, 2020 through January 31, 2021).
• 9.The 10% bonds payable pay interest every January 1. The interest for the 12 months ended December 31, 2020, has not been paid or recorded.

Instructions

(Ignore income taxes.)

(c)  

Prepare a multiple-step income statement for the year ending December 31, 2020.

(d)  

Prepare a retained earnings statement for the year ending December 31, 2020.

(e)  

Prepare a classified balance sheet as of December 31, 2020.

Total assets $273,400

Answer 1

C). Income Statement :-

Particulars	Amount($)	Amount($)
Sales Revenue		570000
Less : Cost of Goods Sold		(400000)
Gross Proft		170000
Less : Operating Expenses
Bed Debt Expenses	4650
Interest Expenses	5000
Depreciation Expenses	6600
Other Operating Expenses	39000
Salaries and Wages Expenses	65000
Total Operating Expenses	120250	(120250)
Operating Income		49750
Add : Rent Revenue		6000
Net Income		55750

D) Statement of Retained Earnings :-

Particulars	Amount($)
Beginning Balance	75050
Add : Net Income	55750
Less : Cash Dividends	(6750)
Ending Balance	124050

E) Balance Sheet :-

Assets :-	Amount($)	Amount($)
Current Assets -
Cash		55800
Accounts Receivable	51000
Less : Allowance for Doubtful Accounts	(5100)	45900
Inventory		22700
Total Current Assets (A)		124400
Property, Plant and Equipment
Land		65000
Building (Net) ($95000-$33000)		62000
Equipment (Net) ($40000-$18000)		22000
Total Property, Plant and Equipment (B)		149000
Total Assets (A+B)		273400
Liabilities and Stockholders' Equity :-
Current Liabilities -
Accounts Payable		19300
Interest Payable		5000
Dividends Payable		6750
Unearned Rent Revenue		2000
Total Current Liabilities (C)		33050
Long Term Liabilities -
Bonds Payable		50000
Total Long Term Liabilities (D)		50000
Stockholders' Equity -
Preferred stock	20000
Common stock	40000
Paid in Capital in Excess of Par - Preferred Stock	2000
Paid in Capital in Excess of Par - Common Stock	19000
Total Paid in Capital (E)	81000	81000
Retained Earnings	124050
Less : Treasury Stock	(14700)
Retained Earnings (Net) (F)		109350
Total Stockholders' Equity (G)=(E+F)		190350
Total Liabilities and Stockholders' Equity(C+D+G)		273400