Financial Statements

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.