Condensed Income Statement for 2019 Sales Cost of Goods Sold Gross Profit $ $ $ 265,320 148,290 117,030 Statement of Comprehensive Income 2019 Net Income $ 48,967 Other Comprehensive Income Unrealized Gain on AFS Debt Securities $ 158 Income Tax Effects (33) Total Other Comprehensive Ir $ 125 Comprehensive Income $ 49,125 The following is information for ABC-a publicly traded company Balance Sheet at end of 2019 (amounts in thousands) Current Assets Cash $ 4,650 Accounts Receivable $ 18,260 Inventory $ 21,275 Prepaid insurance $ 5,700 Total Current Assets $ 49,885 Property, Plant and Equipment $ 311,000 Accumulated Depreciation $ (103,500) Patent $ 36,000 AFS Debt Securities $ 2,100 Total Assets $ 295,485 Current Liabilities Accounts Payable $ 25,862 Wages Payable $ 1,085 Unearned Revenue $ 1,600 Total Current Liabilities $ 28,547 Note Payable $ 114,000 Bond Payable in 2021 $ 30,000 Equity Common Stock ($1 par, 10,000 shares $ 10,000 APIC $ 20,800 Retained Earnings $ 92,435 Accumulated Other Comprehensive La $ (297) Liabilities and Equity $ 295,485 Wages Expense Depreciation Expense Amortization Expense Insurance Expense Interest Expense Other Expense Total Expenses Income before Taxes Income Tax Expense Net Income $ $ $ $ $ $ $ $ $ $ 23,450 15,220 1,500 767 10,150 3,960 55,047 61,983 13,016 48,967 4.90 RE AOCI Earnings Per Share Statement of Changes in Stockholders Equity - 2019 CS APIC Beginning $ 10,000 $ 20,800 $ 47,468 $ (422) Total OCI $ 125 Net Income $ 48,967 Dividends $ (4,000) Ending Balance $10,000 $ 20,800 $92,435 $ (297) Results for 2020 Sales $ 279,300 All sales on credit Inventory Purchases on credit = 191,400 and ending inventory $56200 Depreciation expense $ 16,000 not including assets sold, bought or found Patent purchased in 2018 and determined to have remaining useful life of 12 years in 2020 Wages Expense $ 29,250 Paid in cash $ 2,194 owed at end of 2020 Insurance policy indicates that $5,700 was paid in May 2019 for 24 month coverage starting May 1 2019. During 2020 found an asset purchased and recorded in 2016 that had not been depreciated - cost 4,230 no salvage 10 year useful life Sold AFS Debt Securities that cost 400 for 390 in cash ($7 loss in AOCI recorded previously) Sold equipment that cost 3,000 with accumulated depreciation of 2,690 (360 in 2020) for $200 in cash. Purchased new equipment costing $6,975 with $2,000 down payment and 10% note payable on December 1, 2020 (first payment due January 1, 2021) 10 year useful life and no salvage Collections on A/R = 275,320 Payments on A/P = 176,500 - all accounts payable deal with inventory All service agreements sold to customers in 2019 completed in 2020. New service agreements sold for $2460 in cash during 2020 - 40 percent of the services provided during 2020 Bond terms - interest only for 6.5% paid annually on September 1. Firm agreement with a bank signed on December 15 to refinance bond to a 5 year note in 2021 Note Payable - payment of $3,300 made March 30, June 30, Sept 30 and December 31 interest of 8% per year plus principle Fair value of remaining AFS Debt Securities $1,405 Dec 30, 2020 paid dividends equal to $.50 per share. Other Information Tax rate is 21% (unlike 2019 income taxes have not been paid) Half year convention for depreciation Required: 1. Show journal entries or T accounts for results of 2020 operations. 2. Create an income statement including taxes and required EPS disclosures for 2020. 3. Create a statement of comprehensive income for 2020 4. Create a statement of changes in stockholders equity for 2020 5. Create a balance sheet for the end of 2020. 6. Create a cash flow statement for 2020 using the indirect method. 7. Show any necessary disclosures for 2019 that would be needed if both 2019 and 2020 were to be reported Condensed Income Statement for 2019 Sales Cost of Goods Sold Gross Profit $ $ $ 265,320 148,290 117,030 Statement of Comprehensive Income 2019 Net Income $ 48,967 Other Comprehensive Income Unrealized Gain on AFS Debt Securities $ 158 Income Tax Effects (33) Total Other Comprehensive Ir $ 125 Comprehensive Income $ 49,125 The following is information for ABC-a publicly traded company Balance Sheet at end of 2019 (amounts in thousands) Current Assets Cash $ 4,650 Accounts Receivable $ 18,260 Inventory $ 21,275 Prepaid insurance $ 5,700 Total Current Assets $ 49,885 Property, Plant and Equipment $ 311,000 Accumulated Depreciation $ (103,500) Patent $ 36,000 AFS Debt Securities $ 2,100 Total Assets $ 295,485 Current Liabilities Accounts Payable $ 25,862 Wages Payable $ 1,085 Unearned Revenue $ 1,600 Total Current Liabilities $ 28,547 Note Payable $ 114,000 Bond Payable in 2021 $ 30,000 Equity Common Stock ($1 par, 10,000 shares $ 10,000 APIC $ 20,800 Retained Earnings $ 92,435 Accumulated Other Comprehensive La $ (297) Liabilities and Equity $ 295,485 Wages Expense Depreciation Expense Amortization Expense Insurance Expense Interest Expense Other Expense Total Expenses Income before Taxes Income Tax Expense Net Income $ $ $ $ $ $ $ $ $ $ 23,450 15,220 1,500 767 10,150 3,960 55,047 61,983 13,016 48,967 4.90 RE AOCI Earnings Per Share Statement of Changes in Stockholders Equity - 2019 CS APIC Beginning $ 10,000 $ 20,800 $ 47,468 $ (422) Total OCI $ 125 Net Income $ 48,967 Dividends $ (4,000) Ending Balance $10,000 $ 20,800 $92,435 $ (297) Results for 2020 Sales $ 279,300 All sales on credit Inventory Purchases on credit = 191,400 and ending inventory $56200 Depreciation expense $ 16,000 not including assets sold, bought or found Patent purchased in 2018 and determined to have remaining useful life of 12 years in 2020 Wages Expense $ 29,250 Paid in cash $ 2,194 owed at end of 2020 Insurance policy indicates that $5,700 was paid in May 2019 for 24 month coverage starting May 1 2019. During 2020 found an asset purchased and recorded in 2016 that had not been depreciated - cost 4,230 no salvage 10 year useful life Sold AFS Debt Securities that cost 400 for 390 in cash ($7 loss in AOCI recorded previously) Sold equipment that cost 3,000 with accumulated depreciation of 2,690 (360 in 2020) for $200 in cash. Purchased new equipment costing $6,975 with $2,000 down payment and 10% note payable on December 1, 2020 (first payment due January 1, 2021) 10 year useful life and no salvage Collections on A/R = 275,320 Payments on A/P = 176,500 - all accounts payable deal with inventory All service agreements sold to customers in 2019 completed in 2020. New service agreements sold for $2460 in cash during 2020 - 40 percent of the services provided during 2020 Bond terms - interest only for 6.5% paid annually on September 1. Firm agreement with a bank signed on December 15 to refinance bond to a 5 year note in 2021 Note Payable - payment of $3,300 made March 30, June 30, Sept 30 and December 31 interest of 8% per year plus principle Fair value of remaining AFS Debt Securities $1,405 Dec 30, 2020 paid dividends equal to $.50 per share. Other Information Tax rate is 21% (unlike 2019 income taxes have not been paid) Half year convention for depreciation Required: 1. Show journal entries or T accounts for results of 2020 operations. 2. Create an income statement including taxes and required EPS disclosures for 2020. 3. Create a statement of comprehensive income for 2020 4. Create a statement of changes in stockholders equity for 2020 5. Create a balance sheet for the end of 2020. 6. Create a cash flow statement for 2020 using the indirect method. 7. Show any necessary disclosures for 2019 that would be needed if both 2019 and 2020 were to be reported