Question

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 20Y8, were as follows:

Record on journal page 10:

Jan.	3	Issued 15,000 shares of $20 par common stock at $30, receiving cash.
Feb.	15	Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash.
May	1	Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.
	16	Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding.
	26	Paid the cash dividends declared on May 16.
Jun.	8	Purchased 8,000 shares of treasury common stock at $33 per share.
	30	Declared a $1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued.
Jul.	11	Paid the cash dividends to the preferred stockholders.

Record on journal page 11:

Oct.	7	Sold, at $38 per share, 2,600 shares of treasury common stock purchased on Jun. 8.
	31	Recorded the payment of semiannual interest on the bonds issued on May 1 and the amortization of the premium for six months. The amortization is determined using the straight-line method.

Required:

1.

Journalize the selected transactions. Refer to the Chart of Accounts for exact wording of account titles. Note: on May 16 record the declaration of dividends for common shares and the declaration of dividends for preferred shares as two separate entries. You must complete Comprehensive Problem 4 (Part A) before completing Comprehensive Problem 4 (Part B). Required: 2. 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 3. 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. • 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. Equinox Products, Inc. Income Statement 1 2 3 4 5 Selling expenses: 6 7 8 9 10 11 12 13 14 Administrative expenses: 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4. b. Prepare a retained earnings statement for the year ended December 31, 20Y8. Decreases in equity as negative amounts. • 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. Equinox Products, Inc. Retained Earnings Statement 1 2 3 4 5 6 7 5. 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. Equinox Products, Inc. Balance Sheet 1 Assets 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Liabilities 23 24 25 26 27 28 29 30 31 32 Stockholders’ Equity 33 34 35 36 37 38 39 40 41 42 43 44 45

Answer 1

Part 1
DATE	DESCRIPTION	DEBIT	CREDIT
Jan 3, 2018	Cash (15000 shares x $30 per share)	$450,000
	Common Stock (15000 shares x $20 per share)		$300,000
	Paid-In Capital in Excess of Par—Common stock		$150,000
Feb 15, 2018	Cash (4000 shares × $100 per share)	$400,000
	Preferred Stock (4000 shares x $80 per share)		$320,000
	Paid-In Capital in Excess of Par—Preferred stock (4000 x ($100-80))		$80,000
May 1, 2018	Cash ($500,000 x 1.04)	$520,000
	Bonds Payable		$500,000
	Premium on Bonds Payable		$20,000
May 16, 2018	Cash Dividends (Common)	$50,000
	Cash Dividends Payable		$50,000
	(100,000 shares × $0.50 per share)
May 16, 2018	Cash Dividends (Preferred)	20000
	Cash Dividends Payable (20,000 shares × $1 per share)		$20,000
May 26, 2018	Cash Dividends Payable	$50,000
	Cash		$50,000
Jun 8, 2018	Treasury Stock	$264,000
	Cash(8000 shares × $33 per share)		$264,000
Jun 30, 2018	Cash Dividends (20,000 shares x $1 per share)	$20,000
	Cash Dividends Payable		$20,000
Jul 11, 2018	Cash Dividends Payable	$20,000
	Cash		$20,000
Oct 7, 2018	Cash (2,600 shares × $38 per share)	$98,800
	Treasury Stock (2,600 shares × $33 per share)		$85,800
	Paid-In Capital from Sale of Treasury Stock		$13,000
Oct 31, 2018	Interest Expense	$11,500
	Premium on Bonds Payable (amortization premium [($20,000/10 years)× ½]	1000
	Cash (Semiannual interest payment ($500,000 × 5% × ½)		$12,500