Question

After all of the transactions for the year ended December 31, 2016, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follows were taken from the records of Equinox Products Inc.

Income statement data: Advertising expense $150,000 Cost of merchandise sold 3,700,000 Delivery expense 30,000 Depreciation expense—office buildings and equipment 30,000 Depreciation expense—store buildings and equipment 100,000 Dividend revenue 4,500 Gain on sale of investment 4,980 Income from Pinkberry Co. investment 76,800 Income tax expense 140,500 Interest expense 21,000 Interest revenue 2,720 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 5,254,000 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 Available-for-sale investments (at cost) 260,130 Bonds payable, 5%, due 2024 500,000 Cash 246,000 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 500,000 Income tax payable 44,000 Interest receivable 1,125 Investment in Pinkberry Co. stock (equity method) 1,009,300 Investment in Dream Inc. bonds (long term) 90,000 Merchandise inventory (December 31, 2016), 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 stock 886,800 Excess of issue price over par—preferred stock 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, 2016 9,319,725 Store buildings and equipment 12,560,000 Treasury stock (5,400 shares of common stock at cost of $33 per share) 178,200 Unrealized gain (loss) on available-for-sale investments (6,500) Valuation allowance for available-for-sale investments (6,500) On your own paper, in the working papers, or using a spreadsheet, prepare the following: a. Prepare a multiple-step income statement for the year ended December 31, 2016, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below. b. Prepare a retained earnings statement for the year ended December 31, 2016. Save your calculations and enter the requested amounts below. c. Prepare a balance sheet in report form as of December 31, 2016. Save your calculations and enter the requested amounts below. If required, only use the minus sign to indicate net loss before income tax, net loss, or a deficit balance in retained earnings.

Answer 1

Equinox Products Inc
Income Statement as on 31 Dec 2016
			(Amount in $)
				Amount
Sales Revenue				5254000
Other Income				89000
Dividend Revenue			4500
Gain Sale of Investment			4980
Income from Pinkberry Co. Invst			76800
Interest Revenue			2720
Total of Revenue (A)				5343000
Expenses
Cost of Goods Sold				3700000
Advertising Exp				150000
Delivery Exp				30000
Depriciation				130000
Office Builidng & Equip			30000
Store Building & Equip			100000
Interest Exp				21000
Misc admin Exp				7500
Misc Selling Exp				14000
Office Rent Exp				50000
Office Salary Exp				170000
Office Supply Exp				10000
Sale Salaries Exp				385000
Sales Commission				185000
Store Supplies Exp				21000
Total Expenses (B)				4873500
Profit Before Tax (A-B)				469500
Less- Tax Expenses				140500
Profit After Tax				329000
Less- Prefrence Dividend				100000
Net Earning After Dividend				229000
No of Equity Share				100000
EPS (Net Earning for Equity Shareholder/No of Share Outstanding)				2.29

b) Statment of Retained Earning for the year ended December 2016

Net Earning Transfer to B/s		229000
Add- Opening Balance of Retained Earn		9319725
Closing Retained Earning		9548725