Comprehensive Problem 4 (Part A)

Instructions

Chart of Accounts

Journal

Instructions

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 20Y8, were as follows:

Record on journal page 10:

Jan.3Issued 15,000 shares of $20parcommon stockat $30, receiving cash.Feb.15Issued 4,000 shares of $80 par preferred 5%stockat $100, receiving cash.May1Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.16Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share onpreferred stock. On the date of record, 100,000 shares of common stock wereoutstanding, notreasuryshares were held, and 20,000 shares of preferred stock were outstanding.26Paid thecash dividendsdeclared on May 16.Jun.8Purchased 8,000 shares of treasury common stock at $33 per share.30Declared a $1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued.Jul.11Paid the cash dividends to the preferred stockholders.

Record on journal page 11:

Oct.7Sold, at $38 per share, 2,600 shares of treasury common stock purchased on Jun. 8.31Recorded the payment of semiannual interest on the bonds issued on May 1 and the amortization of the premium for six months. The amortization is determined using the straight-line method.

Required:1.Journalize the selected transactions. Refer to the Chart of Accounts for exact wording of account titles. Note: on May 16 record the declaration of dividends for common shares and the declaration of dividends for preferred shares as two separate entries.

Comprehensive Problem 4

Instructions

Chart of Accounts

Labels and Amount Descriptions

Income Statement

Retained Earnings Statement

Balance Sheet

Instructions

Note: You must complete Comprehensive Problem 4 (Part A) before completing Comprehensive Problem 4 (Part B).

Required:1.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 that follow were taken from the records of Equinox Products Inc.a.Prepare a multiple-step income statement for the year ended December 31, 20Y8. Enter all amounts as positive numbers EXCEPT in the Other revenue and expense section. In that section only, enter amounts that represent other expenses as negative numbers using a minus sign.b.Prepare aretained earnings statementfor the year ended December 31, 20Y8.*c.Prepare a balance sheet in report form as of December 31, 20Y8. **Read the instructions above each financial statement carefully. They may contain specific instructions for completing the statement.

Income Statement data:

Advertising expense$ 150,000Cost of goods sold3,700,000Delivery expense30,000Depreciationexpense-officebuildingsandequipment30,000Depreciationexpense-storebuildingsandequipment100,000Income tax expense140,500Interest expense21,000Interest revenue30,000Miscellaneous administrative expense7,500Miscellaneous selling expense14,000Office rent expense50,000Office salaries expense170,000Office supplies expense10,000Sales5,313,000Sales commissions185,000Sales salaries expense385,000Store supplies expense21,000

Retained earnings and balance sheet data:

Accounts payable$ 194,300Accounts receivable545,000Accumulated depreciationoffice buildings and equipment1,580,000Accumulated depreciationstore buildings and equipment4,126,000Allowance for doubtful accounts8,450Bonds payable, 5%, due in 10 years500,000Cash282,850Common stock, $20par(400,000sharesauthorized;100,000sharesissued,94,600outstanding)2,000,000Dividends:Cash dividendsfor commonstock155,120Cash dividends forpreferred stock100,000Goodwill700,000Income tax payable44,000Interest receivable1,200Inventory (December 31, 20Y8),at lower of cost (FIFO) or market778,000Office buildings and equipment4,320,000Paid-in capital from sale oftreasury stock13,000Excess of issue price over par:-Common886,800-Preferred150,000Preferred 5% stock, $80 par(30,000 shares authorized; 20,000 shares issued)1,600,000Premium on bonds payable19,000Prepaid expenses27,400Retained earnings, January 1, 20Y88,197,220Store buildings and equipment12,560,000Treasury stock(5,400sharesofcommonstockatcostof$33pershare)178,200