Balance Sheet Income Statement Cash A/R AFDA | Prepaid Inv Equip Accum A/P Mort Common R/E Rev - Exp Net Ins Depn Pay Stock Income Bal. ...:.. .... ..:.. ..1.... ... ...... 6 -..... ... ....j... 8 ...|... ...j... 9 ...... ......... 10 E.... 11 12 ..j... 13 .... .... ... . ....-.....= =.= Bal. ..:...RoseBlake Retail Limited Income Statement For the Year Ended December 31, 2021AS a=t December 31, 2021 Current Assets: Total Current Assets Property, Plant and Equipment: Total Property Plant 8: Equipment Total Assets Liabilities and Equities Current Liabilities: Long-term Liabilities: Total Liabilities Equity: IotaLSharehnlders' Equity Total Liabilities and Stockholders' equity Retail Ltd. started its operation in 2020. The following is the balance sheet of Retail Ltd as at Dec. 31, 2020. Assets Current Assets: Cash $99,000 Accounts receivable 15,000 Allowance for doubtful accounts (AFDA) (2,000) Inventory 1,750 Prepaid expenses 9,250 Property, Plant and Equipment: Truck 125,000 Accumulated depreciation (62,500) Total assets $185,500 Liabilities and Equities Current Liabilities: Accounts payable 58.000 Long-term Liabilities: Mortgage Davable 10.500 Equity: Common stock 114.500 Retained earnings 52.500 Total liabilities and stockholders' equity $185.500 It is the second year of its operation. The transactions of the company for the year 2021 are described below: Net sales for the year were $100,000 All the sales were on credit (Transaction #1) The company collected 50% of credit sales during the year (Transaction #2) and 90% of the accounts receivable of last year (Transaction #3). The rest of last year's receivable was uncollectible and written off as bad debt (Transaction #4). The company uses allowance method for recording allowances for doubtful accounts (AFDA). It calculates AFDA by using the percentage method. It estimates that 1% of credit sales will be uncollectible (Transaction #5). buys finished goods for resale to the customers. It records inventory under perpetual method following FIFO cost flow. The company sold 800 units of inventory during the year. All the purchases are on credit and the ending balance of accounts payable was $4,500 (Transaction #7 paid payables). The details of all purchases for the year are as follows; (Transaction #6 - do not include beginning inventory) Date Units Cost Per Unit Amount Beginning inventory 50 $35 $1750 2 Jan.30,2021 100 $30 3,000 March, 30,2021 200 $32 6,400 Sept.30.202 200 $35 7.000 Dec.28,2021 300 $34 10,200 Total 350 $28.350 @purchased the truck in 2020. The useful life of the truck was estimated to be 4 years. The salvage value of the truck was estimated to be $5,000. The Company uses double-declining method of depreciation for vehicles. (Transaction #8) Other information: Interest expenses for the year were $1,000, related to Mortgage Payable. (Transaction #9) Operating expenses of BaseBlata for 2021 was $ 20,000 (Transaction #10) Prepaid expenses of last year relates to prepaid insurance premium. The total amount of insurance premium paid in last year has expired during current year. (Transaction #11) Mortgage payable amount of $3,500 is paid by the company in the month of February. Transaction #12) Record Cost of Goods Sold of 800 Units (Transaction #13) Required: 1. Record the above transactions in the accounting equation. (Show necessary calculations). (35 Marks) Hint: Record the beginning balances from the above Balance Sheet first 2. Prepare a multi-step income statement. (10 Marks) 3. Prepare a Classified Balance Sheet (15 Marks)
