Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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,

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, 20Y8, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data below were taken from the records of Equinox Products Inc.

Income statement data:
Advertising expense $150,000
Cost of goods sold 3,700,000
Delivery expense 30,000
Depreciation expenseoffice buildings and equipment 30,000
Depreciation expensestore buildings and equipment 100,000
Income tax expense 140,500
Interest expense 21,000
Interest revenue 30,000
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 5,313,000
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
Bonds payable, 5%, due in 10 years 500,000
Cash 282,850
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 700,000
Income tax payable 44,000
Interest receivable 1,200
Inventory (December 31, 20Y8), 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 parcommon stock 886,800
Excess of issue price over parpreferred 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, 20Y8 8,197,220
Store buildings and equipment 12,560,000
Treasury stock (5,400 shares of common stock at cost of $33 per share) 178,200

1. Prepare an income statement. Deductions in the Other Revenue and Expense section should be entered as negative amounts.

Equinox Products Inc. Income Statement For the Year Ended December 31, 20Y8
Sales
Expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total operating expenses
Income from operations
Other revenue and expense:
Total other revenue and expense
Income before income tax
Income tax
Net income

2. Prepare a retained earnings statement. Decreases in equity should be entered as negative amounts by using a minus sign.

Equinox Products Inc. Retained Earnings Statement For the Year Ended December 31, 20Y8

3. Prepare a balance sheet. Accounts that cause decreases in assets should be entered as negative amounts by using a minus sign.

Equinox Products Inc. Balance Sheet December 31, 20Y8
Assets
Current assets:
Total current assets
Property, plant and equipment:
Total property, plant and equipment
Intangible assets:
Total assets
Liabilities
Current liabilities:
Total current liabilities
Total liabilities
Stockholders Equity
Paid-in capital:
Total paid-in capital
Total stockholders equity
Total liabilities and Stockholders Equity

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones

5th Edition

0130906999, 978-0130906991

More Books

Students also viewed these Accounting questions