11. Preparation of Financial Statements

Braun Company has the following ledger accounts and adjusted balances as of December 31, 2014. All accounts have normal balances. Brauns income tax rate is 40%.

Accounts Payable. 25,000

Accounts Receivable160,000

Accumulated Depreciation-Building 50,000

Administrative Expenses. 50,000

Bonds Payable (Mature 2020).250,000

Building400,000

Cash. 25,000

Common Stock400,000

Cost of Goods Sold.400,000

Dividends 20,000

Interest Revenue.. 20,000

Inventory..280,000

Land.200,000

Loss from Earthquake.. 70,000

(unusual in nature and infrequent in occurrence)

Loss from Sale of Division X........................... 40,000

(Division X is a component of Braun Company)

Loss on Sale of Land.. ..10,000

Patent 30,000

Prepaid Rent. 10,000*

Retained Earnings, January 1, 2014250,000

Sales Revenue.900,000

Selling Expenses.100,000

*Two years rent paid in advance for offsite document storage.

Instructions:

Use this information to prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.