Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For December 31, 20X1, the balance sheet of Baxter Corporation was as follows: Current Assets Liabilities Cash $ 17,000 Accounts payable $ 19,000 Accounts receivable

For December 31, 20X1, the balance sheet of Baxter Corporation was as follows:

Current Assets

Liabilities

Cash

$

17,000

Accounts payable

$

19,000

Accounts receivable

22,000

Notes payable

27,000

Inventory

32,000

Bonds payable

57,000

Prepaid expenses

12,700

Fixed Assets

Stockholders Equity
Gross plant and equipment

$

257,000

Preferred stock

$

27,000

Less: Accumulated depreciation 51,400 Common stock

62,000

Paid in Capital

32,000

Net plant and equipment

$

205,600

Retained earnings

65,300

Total assets

$

289,300

Total liabilities and stockholders equity

$

289,300

Sales for 20X2 were $255,000, and the cost of goods sold was 60 percent of sales. Selling and administrative expense was $25,500. Depreciation expense was 10 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 12 percent, while the interest rate on the bonds payable was 14 percent. This interest expense is based on December 31, 20X1 balances. The tax rate averaged 30 percent. $2,700 in preferred stock dividends were paid, and $2,076 in dividends were paid to common stockholders. There were 10,000 shares of common stock outstanding. During 20X2, the cash balance and prepaid expenses balances were unchanged. Accounts receivable and inventory increased by 12 percent. A new machine was purchased on December 31, 20X2, at a cost of $42,000. Accounts payable increased by 35 percent. Notes payable increased by $6,700 and bonds payable decreased by $13,500, both at the end of the year. The preferred stock, common stock, and capital paid in excess of par accounts did not change. a. Prepare an income statement for 20X2. (Round EPS answer to 2 decimal places.) b. Prepare a statement of retained earnings for 20X2.

c. Prepare a balance sheet as of December 31, 20X2. (Amounts to be deducted should be indicated with parentheses or a minus sign.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

8th Edition

1118484320, 978-1118484326

More Books

Students also viewed these Accounting questions

Question

5. How we can improve our listening skills?

Answered: 1 week ago