Question
East Company has the following ledger accounts and adjusted balances as of December 31, 2020. All accounts have normal balances. Easts income tax rate is
East Company has the following ledger accounts and adjusted balances as of December 31, 2020. All accounts have normal balances. Easts income tax rate is 20%. East has 300,000 shares of $10 par Common Stock authorized and 85,000 shares of Common Stock outstanding.
Accounts Payable. 87,750
Accounts Receivable 707,100
Accumulated Depreciation-Building 168,750
Accumulated Depreciation-Equipment. 140,000
Administrative Expenses. 150,000
Allowance for Doubtful Accounts 67,500
Bonds Payable.. 600,000
Building..1,687,500
Cash. 97,750
Common Stock... 900,000
Cost of Goods Sold.1,282,500
Dividends 75,000
Equipment 652,500
Income from Operations of Division Y.. 135,000
(Division Y is a component of East Company)
Interest Revenue.. 90,000
Inventory...945,000
Land (held for future use).... 675,000
Land (used for building).. 371,250
Loss from Sale of Division Y.. 270,000
(Division Y is a component of East Company)
Loss on Sale of Land.... 33,750
Mortgage Payable ... 813,550*
Paid-In Capital in Excess of Par.. 594,000
Premium on Bonds Payable... 15,000
Prepaid Insurance. 33,750**
Retained Earnings, January 1, 2019 843,750
Sales Discounts. 43,500
Sales Returns and Allowances.112,500
Sales Revenue...3,453,750
Selling Expenses. 416,750
Trademark101,250
Treasury Stock. 90,000
*$50,000 of the principal comes due in 2019.
**Two years insurance paid in advance.
Instructions:
Use this information to prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.
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