GL1201 (Algo) - Based on Exercise 12-11 LO P2, P3, A1

Use the following financial statements and additional information.

MYCONOS INCORPORATED
Comparative Balance Sheets
June 30, 2021 and 2020
	2021	2020
Assets
Cash	$ 104,500	$ 55,800
Accounts receivable, net	81,000	63,000
Inventory	68,000	94,000
Prepaid expenses	5,100	6,400
Total current assets	258,600	219,200
Equipment	157,000	145,000
Accumulated depreciationEquipment	(39,000)	(13,000)
Total assets	$ 376,600	$ 351,200
Liabilities and Equity
Accounts payable	$ 31,000	$ 38,000
Wages payable	8,000	20,000
Income taxes payable	3,800	4,200
Total current liabilities	42,800	62,200
Notes payable (long term)	40,000	80,000
Total liabilities	82,800	142,200
Equity
Common stock, $5 par value	240,000	170,000
Retained earnings	53,800	39,000
Total liabilities and equity	$ 376,600	$ 351,200

MYCONOS INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales		$ 819,000
Cost of goods sold		501,000
Gross profit		318,000
Operating expenses
Depreciation expense	$ 69,000
Other expenses	79,000
Total operating expenses		$ 148,000
		170,000
Other gains (losses)
Gain on sale of equipment		3,500
Income before taxes		173,500
Income taxes expense		53,110
Net income		$ 120,390

Additional Information

1. A $40,000 note payable is retired at its $40,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $68,000 cash.
4. Received cash for the sale of equipment that had cost $56,000, yielding a $3,500 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.