Accounts Payable $ 75,600

Accounts Receivable $103,890

Accumulated Depreciation $ 26,250

Cash $ 80,370

Samuel Mitchell, Capital $331,635

Cost of Goods Sold $621,450

Equipment $142,500

General Expenses $112,350

Interest Expense $ 6,750

Merchandise Inventory $157,500

Prepaid Insurance $ 10,125 (policy expires 6/30/2016)

Salaries payable $ 14,700

Sales $943,500

Selling Expenses $138,750

Withdrawals $ 18,000

6 Task: Mitchells income tax is computed on a graduated scale. Below is the information needed to compute Mitchells income tax expense. (Hint: a lookup table and if statement is required, youll need to set up and name the table. Remember, no tax is assessed if net income before taxes is less than or equal to zero. If you are not familiar with Excels Vlookup function, you may calculate the tax manually from the table and enter it into your financial statements. Remember, if a tax expense exists and is not yet paid, the corresponding liability must be accrued.)

Net income between: Add Plus Of excess over

$0 and $24,999 0 15% 0

$25,000 and $44,999 3,749.85 20% 25,000

$45,000 and $64,999 7,749.65 25% 45,000

$65,000 and $84,999 12,749.40 30% 65,000

$85,000 and $99,999 18,749.10 35% 85,000

$100,000 and over 23,998.75 40% 100,000

The income tax expense is shown as a separate line item on the Income Statement after Net Income Before Taxes. Your final result should be Net Income After Tax. It is common for Net Income to be replaced with Earnings such that you would commonly see titles like Earnings Before Taxes or Earnings Before Interest and Taxes and thus Earnings After Taxes, Earnings After Interest and Taxes. Either format is acceptable but consistency is required. Again, once the tax is calculated and subtracted from earnings, youll need to establish a liability account to keep the accounting equation in balance.

Mitchell Company is a sole proprietorship. Mitchell Company has the following General Ledger account balances at December 31, 2015. The balances reflect all adjusting entries except for accruing income tax. Since it is accrued at year end based on the operating results of the company, you will need to include the income tax liability as part of your statements.

Note: A sole-proprietorship does not have a retained earnings account and therefore there is no Statement of Retained Earnings but instead a Statement of Owners Equity. A distribution from the business to the owner is considered a withdrawal. Sam Mitchell did not make any additional contributions to the business in 2015.

7 Task: Prepare the basic three financial statements in proper form for Mitchell Company for the year ended December 31, 2015. Prepare a multi-step Income Statement, the Statement of Owners Equity and a classified Balance Sheet on separate worksheets within the workbook (Worksheets 2-4). Try not to type or use copy/paste to move the data onto the financial statement worksheets, but rather use point and click (or defined names) to transfer accounts and balances from your data sheet to the desired worksheets (essentially using cell references to design the form and modify balances). Be sure to format the financial statements properly, apply number and cell formatting and center properly on the page.