Question
Blanton Companys balance sheet for 2021 is provided below. For each item of information show which accounts will increase and decrease. Use the financial statement
Blanton Companys balance sheet for 2021 is provided below. For each item of information show which accounts will increase and decrease. Use the financial statement template provided to you during class to do so. Then use the following information to generate the income statement and balance sheet for 2021.
Blanton Co. Balance Sheet | Dec 31, 2020 |
Cash | $ 255,000 |
Accounts receivable | 185,500 |
Allowance for uncollectible accounts | (10,000) |
Inventory | 117,000 |
Equipment, net | 680,000 |
Total assets | $1,227,500 |
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Accounts payable | $ 138,500 |
Common stock | 500,000 |
Retained earnings | 589,000 |
Total liabilities & shareholders' equity | $1,227,500 |
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A) During the year, Blanton purchased $1.6 million worth of inventory on account.
B) Blanton made $2.5 million worth of sales on account during the year. The sold units cost Blanton $1.58 million.
C) Blanton received $2.36 million worth of payments from their customers during the year, and paid $1.68 million to its vendors.
D) Blanton recognizes an allowance for uncollectible accounts based on and aging method using the information below.
Account Age | Probability of Non-Collection | Amount Owed |
0-30 days | 1.0% | $89,100 |
31-60 days | 2.0% | 165,100 |
61-90 days | 12.0% | 45,832 |
Over 90 days | 50% | 9,200 |
E) Blanton then writes off all of their receivables over 90 days old.
F) Blanton recognized $155,000 in depreciation during the year.
G) Blanton had other operating expenses, including wages and salaries of $506,000 all paid in cash by the end of the year.
H) Blanton paid a cash dividend of $90,000 during the year.
I) Blantons tax rate is 18%. The pay all income taxes in the year they are due.
*Ignore any other expenses not discussed in information provided.
Generate the Balance Sheet and Income Statement for 2021. Use the balance sheet provided as a template for your balance sheet. The income statement should separate revenue (net), cost of goods sold, depreciation, other operating expenses, interest expense (if any), and tax expense to arrive at a net income number.
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