Question

If someone knows how to properly do this, that would be AWESOME! Thanks in advance.

FINANCIAL STATEMENT PROJECT #4

Below is the trial balance of Dog Star Corporation on December 31, 2018.

The accounts are listed in alphabetical order and all accounts have normal balances.

Account Title: Balance:

Accounts Payable 220

Interest Payable 21

Accounts Receivable 620

Interest Receivable 3

Accum. Amort. - Patents 450

Interest Revenue 5

Accum. Depl. - Oil Reserve 2,100

Land 2,500

Accum. Depr. - Bldngs. 1,200

Long-Term Notes Payable 4,000

Accum. Depr. - Equip. 900

Loss on Plant Asset Disposal 35

Administrative Expenses 710

Merchandise Inventory 440

Allowance for Bad Debts 150

Notes Receivable (3 month) 900

APIC-Common 1,800

Oil Reserve 8,000

APIC-Preferred 500

Patent 1,200

APIC-Treasury 200

Preferred Stock 1,500

Buildings 8,100

Prepaid Insurance 260

Cash 1,025

Rent Revenue 16

Cash Dividends Declared 150

Retained Earnings 8,100

Common Stock 4,200

Salaries Payable 130

Common Stock Dividend Distributable 200

Sales 8,800

Cost of Goods Sold 5,614

Sales Discounts 260

Equipment 4,400

Sales Returns & Allowances 520

Dividends Payable 300

Selling Expenses 880

FICA Taxes Payable 200

Short-Term Notes Payable 1,900

FUTA Taxes Payable 40

Stock Dividends Declared 350

Income Tax Expense 140

Supplies 180

Income Taxes Payable 35

SUTA Taxes Payable 145

Interest Expense 25

Treasury Stock 800

REQUIRED: Prepare the financial statements for the year for Dog Star Corporation--a multi-step income statement, a statement of retained earnings and a classified balance sheet.

What is different for this project compared to Project #3?

1. New Accounts: Chapter 8: Notes Receivable--can be long or short-term assets--we will work only with short-term notes Interest Receivable is a current asset Bad Debts Expense--this is an operating expense and is assumed to be consolidated into the Selling Expense account Allowance for Bad Debts--this is a contra account TO accounts receivable

Chapter 9: Gains and Losses on Plant Asset Disposal--these are income statement accounts. Intangible Asset accounts Accumulated Amortization--these are contra accounts TO the related intangible asset account Natural Resource asset accounts Accumulated Depletion--these are contra accounts TO the related natural resource account

Chapter 10: Payroll withholding and payroll tax liability accounts--these are all current liabilites as they must be paid in a relatively short time period.

Chapter 11: Preferred Stock is a paid-in capital account APIC accounts are paid-in capital accounts Stock Dividends Declared is a temporary retained earnings account just like the cash Dividends Declared account. Common Stock Dividends Distributable is an adjunct account TO Common Stock--the presentation of adjunct accounts is similar to contra accounts: the adjunct account should be listed directly below the related account; the balance of the adjunct account should then be added to the balance of the related account and this total should be SHOWN Dividends Payable is a current liability account Treasury Stock is a contra account TO the total of Paid-in Capital and Retained Earnings Income Tax Expense is an expense account--for purposes of the multi-step income statement, the account represents the taxes associated with BOTH the operating income AND the nonoperating income sources. So the account is NOT purely an operating expense NOR is it purely a non-operating expense--it is BOTH operating AND non-operating. After computing the operating income, the non-operating revenues/gains and expenses/losses should be listed and then added or subtracted from Operating Income to get Income Before Taxes. Then the Income Tax Expense account is listed and subtracted to determine Net Income Income Taxes Payable is a current liability

2. Classified Balance Sheet: We will now have THREE asset categories: Current, Plant, and Intangible Assets

Answer 1