Question

Note: You must complete Comprehensive Problem 4 (Part A) before completing Comprehensive Problem 4 (Part B).

Required:

1.

After all of the transactions for the year ended December 31, 20Y8, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follow were taken from the records of Equinox Products Inc. a. Prepare a multiple-step income statement for the year ended December 31, 20Y8. Enter all amounts as positive numbers EXCEPT in the Other revenue and expense section. In that section only, enter amounts that represent other expenses as negative numbers using a minus sign. b. Prepare a retained earnings statement for the year ended December 31, 20Y8.* c. Prepare a balance sheet in report form as of December 31, 20Y8. * * Read the instructions above each financial statement carefully. They may contain specific instructions for completing the statement.

Income Statement data:
Advertising expense	$ 150,000
Cost of goods sold	3,700,000
Delivery expense	30,000
Depreciation expense-office buildings and equipment	30,000
Depreciation expense-store buildings and equipment	100,000
Income tax expense	140,500
Interest expense	21,000
Interest revenue	30,000
Miscellaneous administrative expense	7,500
Miscellaneous selling expense	14,000
Office rent expense	50,000
Office salaries expense	170,000
Office supplies expense	10,000
Sales	5,313,000
Sales commissions	185,000
Sales salaries expense	385,000
Store supplies expense	21,000

Retained earnings and balance sheet data:
Accounts payable	$ 194,300
Accounts receivable	545,000
Accumulated depreciation—office buildings and equipment	1,580,000
Accumulated depreciation—store buildings and equipment	4,126,000
Allowance for doubtful accounts	8,450
Bonds payable, 5%, due in 10 years	500,000
Cash	282,850
Common stock, $20 par
(400,000 shares authorized; 100,000 shares issued, 94,600 outstanding)	2,000,000
Dividends:
Cash dividends for common stock	155,120
Cash dividends for preferred stock	100,000
Goodwill	700,000
Income tax payable	44,000
Interest receivable	1,200
Inventory (December 31, 20Y8),
at lower of cost (FIFO) or market	778,000
Office buildings and equipment	4,320,000
Paid-in capital from sale of treasury stock	13,000
Excess of issue price over par:
-Common	886,800
-Preferred	150,000
Preferred 5% stock, $80 par
(30,000 shares authorized; 20,000 shares issued)	1,600,000
Premium on bonds payable	19,000
Prepaid expenses	27,400
Retained earnings, January 1, 20Y8	8,197,220
Store buildings and equipment	12,560,000
Treasury stock
(5,400 shares of common stock at cost of $33 per share)	178,200

2.

c. Prepare a balance sheet in report form as of December 31, 20Y8. You are not required to present the details of Preferred and Common Stock (i.e., number of shares authorized, issued and outstanding). • Refer to the Chart of Accounts for exact wording of account titles. • Refer to the Labels and Amount Descriptions for exact wording of text entries. • Recall that current assets are to be reported in order of liquidity. • Report fixed assets and paid-in capital accounts in account-number order. • Omit the description of bonds and stocks (i.e., percentage rates, due date, number of shares, etc.) • For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Score: 52/338

Equinox Products, Inc.

Balance Sheet

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1	Assets
2	?
3	?		?
4	?	?
5	?	?
6			?
7	?		?
8
9
10	?
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12
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14
15
16
17
18
19
20
21
22	Liabilities
23	?
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25
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31
32	Stockholders’ Equity
33
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45

Answer 1

Equinox Products Inc.

Balance Sheet

For the year ended December 31, 20Y8

Assets		$	$
Cash		282,850
Accounts Receivable	545,000
Allowance for Doubtful Accounts	(8,450)	536,550
Interest Receivable		1,200
Inventories		778,000
Prepaid Expenses		27,400
Total Current Assets			1,626,000
Office Buildings and Equipment	4,320,000
Accumulated Depreciation	(1,580,000)	2,740,000
Store Building and Equipment	12,560,000
Accumulated Depreciation	(4,126,000)	8,434,000
Property, Plant and Equipment, net			11,174,000
Goodwill			700,000
Total Assets			13,500,000
Liabilities and Stockholders' Equity
Accounts Payable	194,300
Income Tax Payable	44,000
Total Current Liabilities		238,300
Bonds Payable	500,000
Premium on Bonds Payable	19,000	519,000
Total Liabilities			757,300
Comon Stock	2,000,000
Preferred Stock	1,600,000	3,600,000
Excess of Issue Price over Par
Common Stock	886,800
Preferred Stock	150,000	1,036,800
Paid-in Capital from Sale of Treasury Stock		13,000
Retained Earnings		8,271,100
		12,920,900
Treasury Stock		(178,200)
Total Stockholders' Equity			12,742,700
Total Liabilities and Stockholders' Equity			13,500,000