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Question No. 3: (LO3) (22 Marks) ARC Inc ADJUSTED TRIAL BALANCE December 31, 2019 Dets 1,595 132.000 12 10 51.150 Isaks Notes Recak |Impuratthut Tam' As Parah Nexumdos Equipment Sales De Sales Retur Puhe Discounts Cash Awek Rent Rete Fang Salaries Pub Notes Payable Commen Stock. Sis par Income Tas Cach vidends Declared Akwance Bur Dube Sepan and 11 212S 3900 16.100 131 TO 495 1112 115.500 10.725 13150 M. 2. Short terms 3:49 Sakson Correction for understooprie period com Other Operating Express Add I.100 10730 Pried and Debele Account 56.100 Made In 214.500 11 Peshows 41150 21.450 1 Leo Sake of Invest Tre Ram Index Beads Payable Accumbined Deprecarios Bulling Adeland 165.000 40495 3. 10785 3.35 3.254,750 The company uses the periodic inventory system. A physical count of inventory on December 31 resulted in an inventory amount of $20,000. The company outstanding 20000 shares with shareholders. Instructions (a) Prepare an income statement for the year ending December 31, 2019 using the Multi- step form. Assume that twenty thousand shares of common stock were outstanding the entire year. (10 Marks) (b) Prepare a retained earnings statement for the year ending December 31, 2019. (5 Marks) (c) Prepare Single-Step Income Statement (Show all working on a separate page). (7 Marks) Solution ABC Inc; ADJUSTED TRIAL BALANCE December 31, 2019 Debits Credits 1,581,525 132.000 146,025 84.150 51.150 17,325 28,875 13,200 313.500 212.850 23.100 396,000 36,300 123.750 495.000 112,200 115,500 10.725 Sales Notes Receivable Investments (short Term) Accounts Payable Accumulated Depreciation Equipment Sales Discounts Sales Returns Purchase Discounts Cash Accounts Receivable Rent Revenue Retained Earnings Salaries Payable Notes Payable Common Stock, $15 par Income Tax Expense Cash Dividends Declared Allowance for Doubtful Accounts Supplies on Hand Freight-In Short term Investment Freight-out Sales commission Correction for understatement of prior period net income (inventory error) Other Operating Expenses (30% Selling 70% Administrative) Land Provision for Bad and Doubtful Account Equipment Merchandise Inventory Buikling Purchases Dividend Income Loss on Sale of Investment Interest Revenue Interest Expense Bonds Payable Gain on Sale of Land Accumulated Depreciation Building Accumulated Depreciation Land Totals 18.150 26.400 82.500 24,750 349,800 82,500 188,100 107.250 56,100 214.500 130.350 171,600 825,000 41,250 21,450 14,850 20.625 165,000 40,425 33.000 10.725 3.258.750 3,258,750