1.

The following balance sheet was prepared by the bookkeeper for Diamone Company as of December 31, 201x Diamond Company.

Balance Sheet as of December 31, 201X is as follows .

Cash	$90,000	Accounts payable	$75,000
Accounts receivable (net)	42,200	Long-term liabilities	100,000
Inventories	57,000	Stockholders' equity	218,500
Investments	76,300
Equipment (net)	96,000
Patents	32,000
	$393,500		$393,500

The following additional information is provided:

(1) Cash includes the cash surrender value of a life insurance policy $5,000 and a bank overdraft of $4,000 has been deducted.

(2)The net accounts receivable balance includes:

(a) accounts receivable debit balances $50,000;

(b) accounts receivable credit balances $0; and

(c) allowance for doubtful accounts $3,800.

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

(4) Investments include investments in common stock, trading $13,000, available-for-sale $46,300, and franchises $17,000.

(5) Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.

Instructions:

Prepare a balance sheet in good form (stockholders' equity details can be omitted).

Do not worry about balancing the statement but rather use your time to compute the account balances properly for presentation purposes.

Question 2:

Presented below is information related to Square Company.

Retained earnings, December 31, 20X2	$2,750,000
Sales	2,000,000
Selling and administrative expenses	240,000
Hurricane loss (pre-tax) on plant (extraordinary item)	250,000
Cash dividends declared on common stock	33,600
Cost of goods sold	960,000
Gain resulting from computation error on depreciation charge in 20X1 (pre-tax)	2,000,000
Other revenue	80,000
Other expenses	50,000

Instructions: Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 100,000 shares of common stock were outstanding during the year

3.On January 2, Year 1, Logan Co. purchased a manufacturing machine for $864,000. The machine has an 8year estimated life and a $144,000 estimated salvage value. Logan expects to manufacture 1,800,000 units over the life of the machine. During Year 2, Logan manufactured 300,000 units. Instructions: Calculate the Year 2 depreciation expense using (1) straight line depreciation and (2) double-declining balance depreciation.