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)

Question No. 3: (LO3) (22 Marks) 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 Retums 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 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 Totals 3,258,750 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