Here are the Journal entry answers to part 1:

Part 2 Instructions: Page 2 The balances listed below are for December 31 and already include the journal entries you just prepared except for the stockholders' equity accounts. The balances listed for the stockholders' equity accounts are the January 1 balances. You will need to utilize the journal entries you just prepared to complete the Statement of Stockholders' Equity. Prepare a multistep income statement, a statement of stockholders' equity, and a classified balance sheet in good form for the year ended December 31, 20X1. Use the Student Input Form (Excel File) to complete the Financial Statements Credit Debit 150,000 99,000 5,000 25,000 2,500 10,000 1,500 1,000 7,500 152,500 75,000 41,950 2,000 50,000 2,500 114,025 0 0 55,000 Cash Accounts receivable Allowance for doubtful accounts Equity Investments at cost Valuation allowance for Equity Investments Merchandise inventory at lower of cost (FIFO) or market Prepaid expenses Interest receivable Investment in Masco Company stock Store buildings and equipment Accumulated depreciation-store buildings and equipment Accounts payable Income tax payable Bonds payable, 10%, due in 10 years Premium on bonds payable Retained earnings, January 1, 20X1 Cash dividends , January 1, 20X1 balance Stock Dividends, January 1, 20X1 balance Common stock, $10 par (100,000 shares authorized; 5500 shares outstanding), January 1, 20X1 Paid-in capital in excess of par-common stock, January 1, 20X1 Paid-in capital from sale of treasury stock, January 1, 20X1 Treasury stock, January 1, 20X1 Sales Gain from sale of investment Unrealized gain(loss) on Equity Investments Dividend revenue Interest revenue Income of Masco Company Cost of goods sold Advertising expense Depreciation expense-store buildings and equipment Miscellaneous selling expenses Sales commissions Office rent expense Office salaries expense Miscellaneous administrative expenses Interest expense Income tax expense 5,500 0 0 350,000 500 4,800 400 1,350 10,000 200,000 $5,000 3,500 2,500 10.000 25,000 30,000 500 2,500 20,000 Journal Entries Cash Common stock Paid in Capital in excess of Par 2 - 8 points each (75 points) 27,500 25,000 2,500 53,252 Cash Premium on Bonds payable Bonds Payable 3,252 50,000 2,000 Cash Dividend Dividend payable 2,000 2,000 Dividend payable Cash 2,000 Trading investment - Shares of Jones Cash 31,500 31,500 10,000 Stock Dividend Stock Dividend distributable 10,000 10,000 Stock Dividend distributable Common Stock Paid in Capital in excess of par 4,000 6,000 5,000 Investment in bonds Cash 5,000 1,800 Treasury common stock Cash 1,800 125 Cash Interest Income 125 300 Cash Dividend income 300 Page 4 500 Cash Investment in associate 500 1,275 Cash Treasury common stock Paid in capital in excess of par 900 375 Cash 7,800 Trading investment - Shares of jones company Gain on sale of investment 6,300 1,500 10,000 investment in associate income from associate 10,000 5,213 Cash Investment in bonds interest income gain on sale of investment 5,000 63 150 4,800 Trading investment - Share of Jones Unrealized gain on trading investment 4,800 Interest expense Amortization of the premium cash 2,337 163 2,500