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In: Accounting

Use the following information to prepare a multi-step income statement and a balance sheet for Sherman...

Use the following information to prepare a multi-step income statement and a balance sheet for Sherman Equipment Co. for Year 2. (Hint: Some of the items will not appear on either statement, and ending retained earnings must be calculated.) (Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

Salaries Expense $ 75,000 Operating Expenses $ 68,000
Common Stock 100,000 Cash Flow from Investing Activities 84,400
Notes Receivable (short term) 30,000 Prepaid Rent 13,100
Allowance for Doubtful Accounts 8,400 Land 46,000
Uncollectible Accounts Expense 8,700 Cash 48,700
Supplies 1,800 Inventory 98,900
Interest Revenue 6,000 Accounts Payable 52,000
Sales Revenue 344,000 Salaries Payable 18,000
Dividends 4,100 Cost of Goods Sold 154,000
Interest Receivable (short term) 2,100 Accounts Receivable 62,000
Beginning Retained Earnings 84,000

  

Solutions

Expert Solution

1. Sherman Equipment Co. Income Satement For the Year Ending December 31

Sales Revenue $344,000
Cost of Goods Sold $(154,000)
Gross Margin $190,000
Operating Expense ;
Salaries Expenses $75,000
Operating Expense $68,000
Uncollectable Account Expense $8,700 $151,700
Operating Income $38,300
Non- Operating Items;
Interest Revenue $6,000
Net Income $44,300

2. Sherman Equipment Co. Balancesheet   

Assets
Cash $48,700
Accounts Receivable $62,000
Less: Allowance for doubtful accounts $(8,400) $53,600
Inventory $98,900
Interest Receivable $2,100
Prepaid Rent $13,100
Supplies $1,800
Note Receivable $30,000
Land $46,000
Total Asset $294,200
Liabilities and Stockholders Equity
Current Liabilities;
Accounts Payable $52,000
Salaries Payable $18,000
Total Liabilities $70,000
Stockholders Equity
Common Stock $100,000
Retained Earnings $124,200
Total Stockholders Equity $224,200
Total Liabilities and Stockholders Equity $294,200

Retained Earnings

= $84,000 + $44,300-$4,100 = $ 124,200


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