1)

Calculation of ending retained earnings

The records of Biloxi Corp. for calendar 2020 reflected the following correct pre-tax amounts: gain from discontinued operations, $50,000; cash dividends declared and paid, $45,000; retained earnings, January 1, 2020, $275,000, correction of accounting error, $35,000 debit; income before income taxes and before discontinued operations, $165,000. The average income tax rate of 40% applies to all items except the dividends.

Instructions

Calculate the December 31, 2020 ending balance of retained earnings.

2)

Statement of financial position presentation

The following statement of financial position was prepared by the bookkeeper for Badger Corp. at December 31, 2020.

Badger Corp.

Statement of Financial Position

December 31, 2020

Cash $ 90,000 Accounts payable $75,000

Accounts receivable (net) 52,200 Long-term liabilities 110,000

Inventories 57,000 Shareholder's equity 208,500

Investments 76,300

Equipment (net) 86,000

Patents 32,000

$393,500 $393,500

The following additional information is provided:

1. "Cash" includes prepaid insurance of $9,400; as well, a bank overdraft of $1,500 has been deducted.

2. The net accounts receivable balance includes:

(a) accounts receivabledebit balances $62,000;

(b) accounts receivablecredit balances $5,000;

(c) allowance for doubtful accounts $4,800.

3. Inventories do not include goods costing $5,000 shipped out on consignment. Receivables of $5,000 were recorded on these goods.

4. Investments include investments in common shares, trading $24,000 and long-term $43,300, and franchises $9,000.

5. Equipment costing $8,000 with accumulated depreciation $6,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.

Instructions

Prepare a statement of financial position in good form (shareholders' equity details can be omitted.)