8.5.2

Client Corporation Adjusted Trial Balance December 31, 2020 Credit Debit 412,789 50,000 350,000 42,000 53,000 2,440,000 244,000 60,000 13,500 30,000 88,500 300,000 43,355 Account Cash Accounts Receivable Inventory Prepaid Insurance Short-term Investments Plant, Property & Equipment Accumulated Depreciation Right of Use Asset Patent Accounts Payable Income Tax Payable Bonds Payable Lease Liability Discount on Bonds Payable Common Stock $1 par Paid-In Capital in Excess of Par, Common Stock Retained Earnings Sales Revenue Dividends Declared Gain on Sale of Short-term Investments Cost of Goods Sold Depreciation Expense Income Tax Expense Insurance Expense Interest Expense Salary Expense Utilities Expense Totals 10,000 500,000 1,655,000 0 8,721,685 15,000 6,750 4,675,750 244,000 335,000 42,000 26,500 2,370,013 449,738 11,589,290 $ $ 11,589,290 Additional Information: This year (2020) was the company's first year of operations. Accounts payable relate only to purchases of inventory. All sales were made on account. The bonds payable are five-year, 8% bonds that were issued January 1, 2020, for $287,500. The discount is being amortized by the straight-line method. A two-year insurance policy was acquired on January 1, 2020. The short-term investments are all investments in equity securities; cost equals market value. Short-term investments that were purchased for $30,000 were sold for cash on December 1. Purchases of Property, Plant, and Equipment were paid with cash. The Right of Use asset relates to equipment that Client leased on December 31, 2020 on a 5-year finance lease. The annual lease payment of $16,645 is due on December 31 of each year. The first payment was made December 31, 2020. As of December 31, 2020, the current portion of the lease liability is $11,442. Required: Using the trial balance on page and the additional information provided above, prepare the following financial statements for Client Corporation: 1. An Income Statement for the year ending December 31, 2020. Use the multiple-step format, and be sure to include appropriate per-share disclosures 2. A Statement of Retained Earnings for the year ending December 31, 2020. 3. A classified Balance Sheet as of December 31, 2020