Comprehensive Problem $4$

Part $2$:

Note: You must complete part $1$ before part $2.$

After all of the transactions for the year ended December $31,20$Y$2,$ 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.

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 from 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 depreciation$$office buildings and equipment $1,580,000$

Accumulated depreciation$$store buildings and equipment $4,126,000$

Allowance for doubtful accounts $8,450$

Available$-$for$-$sale investments $($at cost$)260,130$

Bonds payable, $5\%,$ due $20$Y$4500,000$

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$)1,009,300$

Investment in Dream Inc. bonds $($long term$)90,000$

Merchandise inventory $($December $31,20$Y$2),$ 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 $886,800$

Excess of issue price over par$$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 $1,20$Y$29,319,725$

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 $(6,500)$

On your own paper, in the working papers, or using a spreadsheet, prepare the following:

a$.$ Prepare a multiple$-$step income statement for the year ended December $31,20$Y$2,$ 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.($Round earnings per share to the nearest cent.$)$ Save your calculations and enter the requested amounts below.

b$.$ Prepare a retained earnings statement for the year ended December $31,20$Y$2.$ Save your calculations and enter the requested amounts below.

c$.$ Prepare a balance sheet in report form as of December $31,20$Y$2.$ Save your calculations and enter the requested amounts below.

If required, only use the minus sign to indicate loss before income tax, net loss, or a deficit balance in retained earnings.

Gross profit $fill in the blank $1$

Total selling expenses $fill in the blank $2$

Total administrative expenses $fill in the blank $3$

Total operating expenses $fill in the blank $4$

Income from operations $fill in the blank $5$

Net other expenses and income $fill in the blank $6$

Income tax $fill in the blank $7$

Net income $fill in the blank $8$

Earnings per common share $($rounded to the nearest cent$)$ $fill in the blank $9$

Retained earnings, January $1,20$Y$2$ $fill in the blank $10$

Total current assets $fill in the blank $11$

Investment in Dream Inc. bonds $fill in the blank $12$

Total property, plant, and equipment $fill in the blank $13$

Total assets $fill in the blank $14$

Total current liabilities $fill in the blank $15$

Net long$-$term liabilities $fill in the blank $16$

Total liabilities $fill in the blank $17$

Total paid$-$in capital preferred $5\%$ stock $fill in the blank $18$

Total paid$-$in capital common stock, $$20$ par $fill in the blank $19$

Total paid$-$in capital $fill in the blank $20$

Retained earnings, December $31,20$Y$2$ $fill in the blank $21$

Total stockholders' equity $fill in the blank $22$