After all of the transactions for the year ended December 31, Year 1, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follows were taken from the records of Equinox Products Inc.

A.

Prepare a multiple-step income statement for the year ended December 31, Year 1, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. Enter all amounts as positive numbers EXCEPT in the Other income and expenses. In that section only, enter amounts that represent other expenses as negative numbers using a minus sign. (Round earnings per share to the nearest cent.)

B.

Prepare a retained earnings statement for the year ended December 31, Year 1.*

C.

Prepare a balance sheet in report form as of December 31, Year 1.*

*Read the instructions above each financial statement carefully. They may contain specific instructions for completing the statement.

Income Statement data:
Advertising expense	$150,000
Cost of merchandise sold	3,700,000
Delivery expense	30,000
Depreciation expense-office buildings and equipment	30,000
Depreciation expense-store buildings and equipment	100,000
Dividend revenue	4,500
Gain on sale of investment	4,980
Income of Pinkberry Co. investment	76,800
Income tax expense	140,500
Interest expense	21,000
Interest revenue	2,720
Miscellaneous administrative expense	7,500
Miscellaneous selling expense	14,000
Office rent expense	50,000
Office salaries expense	170,000
Office supplies expense	10,000
Sales	5,254,000
Sales commissions	185,000
Sales salaries expense	385,000
Store supplies expense	21,000

Retained earnings and balance sheet data:
Accounts payable	$194,300
Accounts receivable	545,000
Accumulated depreciationoffice buildings and equipment	1,580,000
Accumulated depreciationstore buildings and equipment	4,126,000
Allowance for doubtful accounts	8,450
Available-for-sale investments (at cost)	260,130
Bonds payable, 5%, due 20Y2	500,000
Cash	246,000
Common stock, $20 par
(400,000 shares authorized; 100,000 shares issued, 94,600 outstanding)	2,000,000
Dividends:
Cash dividends for common stock	155,120
Cash dividends for preferred stock	100,000
Goodwill	500,000
Income tax payable	44,000
Interest receivable	1,125
Investment in Pinkberry Co. stock (equity method)	1,009,300
Investments-Dream Inc. bonds (long term)	90,000
Merchandise inventory (December 31, Year 1),
at lower of cost (FIFO) or market	778,000
Office buildings and equipment	4,320,000
Paid-in capital from sale of treasury stock	13,000
Excess of issue price over par:
-Common stock	886,800
-Preferred stock	150,000
Preferred 5% stock, $80 par
(30,000 shares authorized; 20,000 shares issued)	1,600,000
Premium on bonds payable	19,000
Prepaid expenses	27,400
Retained earnings, January 1, Year 1	9,319,725
Store buildings and equipment	12,560,000
Treasury stock
(5,400 shares of common stock at cost of $33 per share)	178,200
Unrealized gain (loss) on available-for-sale investments	(6,500)
Valuation allowance for available-for-sale investments	(6,500)

Labels
Current assets
Current liabilities
December 31, Year 1
Dividends
For the Year Ended December 31, Year 1
Intangible assets
Investments
Long-term liabilities
Operating expenses
Other revenue and expenses
Paid-in capital
Property, plant, and equipment
Amount Descriptions
Available-for-sale investments
Decrease in retained earnings
Gross profit
Income before income tax
Income from operations
Increase in retained earnings
Net income
Net loss
Retained earnings, January 1, Year 1
Retained earnings, December 31, Year 1
Total administrative expenses
Total
Total assets
Total current assets
Total current liabilities
Total liabilities
Total liabilities and stockholders equity
Total long-term liabilities
Total investments
Total operating expenses
Total paid-in capital
Total property, plant, and equipment
Total selling expenses
Total stockholders equity

CHART OF ACCOUNTS

Equinox Products Inc.

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
122	Allowance for Doubtful Accounts
131	Merchandise Inventory
132	Interest Receivable
133	Prepaid Expenses
141	Investments-Solstice Corp. Stock
142	Investment in Pinkberry Co. Stock
143	Investments-Dream Inc. Bonds
144	Valuation Allowance for Available-for-Sale Investments
181	Store Buildings and Equipment
182	Accumulated Depreciation-Store Buildings and Equipment
183	Office Buildings and Equipment
184	Accumulated Depreciation-Office Buildings and Equipment
191	Goodwill

	LIABILITIES
211	Accounts Payable
221	Income Tax Payable
225	Cash Dividends Payable
251	Bonds Payable
252	Discount on Bonds Payable
253	Premium on Bonds Payable

	EQUITY
311	Preferred Stock
312	Paid-in Capital in Excess of Par-Preferred Stock
321	Common Stock
322	Paid-in Capital in Excess of Par-Common Stock
331	Retained Earnings
341	Cash Dividends
351	Treasury Stock
352	Paid-in Capital from Sale of Treasury Stock
361	Unrealized Gain (Loss) on Available-for-Sale Investments

	REVENUE
410	Sales
611	Dividend Revenue
621	Interest Revenue
631	Income of Pinkberry Co. Investment
641	Gain on Sale of Investments

	EXPENSES
511	Cost of Merchandise Sold
512	Bad Debt Expense
520	Sales Salaries Expense
521	Sales Commissions
522	Office Salaries Expense
531	Advertising Expense
532	Delivery Expense
537	Store Supplies Expense
538	Office Supplies Expense
539	Office Rent Expense
541	Income Tax Expense
551	Depreciation Expense-Store Buildings and Equipment
552	Depreciation Expense-Office Buildings and Equipment
591	Miscellaneous Selling Expense
592	Miscellaneous Administrative Expense
710	Interest Expense
731	Loss on Sale of Investments

Equinox Products Inc. Score: 31/64 Retained Earnings Statement (Label) 1 Retained earnings, January 1, Year 1 $9,319,725.00 2 Net income $329,000.00 3 Dividends: 4 Common stock $255,120.00 5 Cash 6 (321,360.00) 7 Retained earnings, December 31, Year 1 $9,327,365.00 Equinox Products Inc. Score: 76/364 Balance Sheet (Label) 1 Assets 2 Current assets: 3 Cash $282,850.00 4 Accounts receivable 5 Less: allowance for doubtful accounts 6 Merchandise inventory 7 Less: Prepaid expenses 8 Interest receivable 9 Prepaid expenses 10 11 Total current assets 12 Store buildings and equipment: Office buildings and equipment 13 14 Office buildings and equipment 15 (Label) 16 17 18 19 20 21 (Label) 22 23 24 Liabilities 25 Accounts payable: 26 Income tax payable 27 Total current liabilities 28 Total current liabilities 29 Long term Liabilities: 30 Bonds payable 31 Add: premium on bonds payable 32 33 34 Stockholders' Equity 35 (Label) 36 Preferred stock 37 Paid-in capital in excess of par-Preferred stock 38 Common stock 39 40 41 42 43 Retained earnings 44 Treasury stock 45 Deduct: Paid-in capital from sale of treasury stock 46 Total stockholders' equity 47 Total liabilities and stockholders' equity