Question
Connor Company has the following ledger accounts and adjusted balances as of December 31, 2016. All accounts have normal balances. Connors income tax rate is
Connor Company has the following ledger accounts and adjusted balances as of December 31, 2016. All accounts have normal balances. Connors income tax rate is 40%. Connor has 500,000 shares of common stock authorized, 100,000 shares issued, and 80,000 shares outstanding.
Accounts Payable. 15,000
Accounts Receivable 75,000
Accumulated Depreciation-Building 20,000
Administrative Expenses. 35,000
Building...150,000
Cash. 50,000
Common Stock200,000
Patent.....20,000
Cost of Goods Sold.250,000
Dividends 10,000
Equity Investments (Trading).. 15,000
Gain on Sale of Land....... 5,000
Loss from Sale of Division X.......................... 10,000
(Division X is a component of Connor Company)
Income from Division X. 30,000
(Division X is a component of Connor Company)
Interest Expense.. 10,000
Interest Revenue.. 5,000
Inventory.145,000
Land100,000
Loss from Hurricane... 35,000
(unusual in nature and infrequent in occurrence)
Notes Payable.175,000*
Paid-In Capital in Excess of Par-Common. 50,000
Prepaid Insurance 10,000**
Retained Earnings, January 1, 2016... 74,000
Sales Revenue450,000
Selling Expenses. 40,000
Treasury Stock.25,000
*$35,000 is due on 12/31 of each year for the next five years.
**Two-years insurance policy providing coverage for 2017 and 2018.
Instructions:
Use this information to prepare a classified balance sheet, a retained earnings statement and a multiple-step income statement.
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