Instructions for Projects $3\mathrm{.}1-3\mathrm{.}3$Balance Sheet & Income Statement $($Including Basic & Diluted EPS$)$Project Instructions There are three exercises in Project $3$: Project $3\mathrm{.}1$ Balance Sheet & Income Statement Part I, Project $3\mathrm{.}2$ Balance Sheet & Income Statement Part II$,$ and Project $3\mathrm{.}3.$ Balance Sheet & Income Statement Part III. Please read the following instructions and review the table carefully. Then, enter answers for journal items $([$A$]$ to $[$K$]$ for Project $3\mathrm{.}1,[$A$]$ to $[$K$]$ for Project $3\mathrm{.}2$ and $[$A$]$ to $[$Z$],$ parts $[$i$]$ and $[$ii$]$ for Project $3\mathrm{.}3)$ in the next three items in this Lesson, called Project $3$: Project $3\mathrm{.}1$ Balance Sheet & Income Statement Part I, Project $3\mathrm{.}2$ Balance Sheet & Income Statement Part II$,$ and Project $3\mathrm{.}3.$ Balance Sheet & Income Statement Part III. If it's a negative number, please enter a negative number $($i$.$e$.$ a minus sign$).$ You may keep these instructions open in a separate browser or download the instructions as a PDF$,$ and open it as you work through the exercise. For specific layouts of the balance sheet and income statement, please refer to the PDF file below. The Balance Sheet of the Illini as of $12/31/20$X$0$: Illini Company, Inc.Balance Sheetas of $12/31/20$X$0$ AssetsCurrent Assets: Cash $$1,500,000$ Accounts receivable, net $18,000$ Inventory $50,000$Total current assets $1,568,000$Equipment $90,000$Goodwill $20,000$Total assets $$1,678,000$ Liabilities and shareholders' equity Shareholders' equity: Common stock, $20,000$ shares outstanding, $$1$ par$$20,000$Additional paid$-$in capital $280,000$Retained earnings $1,378,000$Total shareholders' equity $1,678,000$ Total liabilities and shareholders' equity$$1,678,000$ Note that all additional paid$-$in capital $($APIC$)$ sub accounts $($e$.$g$.,$ APIC$-$options and APIC$-$treasury stock$),$ if any, are tracked in the Additional paid$-$in capital account on the Balance Sheet. Project $3\mathrm{.}1$ Balance Sheet & Income Statement Part IPlease enter answers for blank journal items in the following Balance Sheet and Income Statement for $20$X$1.$ Note that for the purpose of preparing the Balance Sheet at the end of each year: For investments, you need to classify whether they are current assets $($i$.$e$.,$ short$-$term investment$)$ or non$-$current assets $($i$.$e$.,$ long$-$term investment$)$; For bonds, you need to determine what portion of the bonds payable is current liability and what portion is non$-$current liability. Current portion of the bonds payable is the principal payment portion of the cash interest payments in the next year. Non$-$current portion is the remaining amount of the bonds payable; and For leases $($as the lessee$),$ you need to determine what portion of the lease obligation is current liability and what portion is non$-$current liability. Current portion of the lease obligation is the principal payment portion of the cash lease payment in the next year $($i$.$e$.,$ the amortization amount of the lease obligation in the next year$).$ Non$-$current portion is the remaining amount of the lease liability.Illini Company, Inc.Income StatementFor the Year Ended December $31,20$X$1$ Sales $$1,132,357$Cost of sales $($inventory$/$equipment$)692,000$ Gross profit $440,357$Operating expenses: Insurance expense $4,000$ Utility expense $30,000$ Rent expense $20,000$ Compensation expense $[$A$]$ Bad debt expense $[$B$]$ Depreciation expense $[$C$]$ Maintenance expense $3,000$ Warranty expense $21,000$ Rental expense $($lease$)[$D$]$ Pension expense $[$E$]$ Selling expense$-$Initial issuance cost$10,000$ Total operating expenses $[$F$]$Operating income $[$G$]$Other income $($expense$)$: Investment revenue $7,500$ Interest revenue $9,636$ Unrealized holding losses $-$ NI$[$H$]$ Interest expense $(22,142)$Net income $[$I$]$Basic EPS $[$J$]$Diluted EPS $[$K$]$ Project $3\mathrm{.}2$ Balance Sheet & Income Statement Part IIPlease enter answers for blank journal items in the following Balance Sheet and Income Statement for $20$X$2.$ Note that for the purpose of preparing the Balance Sheet at the end of each year: For investments, you need to classify whether they are current assets $($i$.$e$.,$ short$-$term investment$)$ or non$-$current assets $($i$.$e$.,$ long$-$term investment$)$; For bonds, you need to determine what portion of the bonds payable is current liability and what portion is non$-$current liability. Current portion of the bonds payable is the principal payment portion of the cash interest payments in the next year. Non$-$current portion is the remaining amount of the bonds payable; and For leases $($as the lessee$),$ you need to determine what portion of the lease obligation is current liability and what portion is non$-$current liability. Current portion of the lease obligation is the principal payment portion of the cash lease payment in the next year $($i$.$e$.,$ the amortization amount of the lease obligation in the next year$).$ Non$-$current portion is the remaining amount of the lease liability. Illini Company, Inc.Income StatementFor the Year Ended December $31,20$X$2$ Sales $$1,200,000$Cost of sales $($inventory$/$equipment$)820,000$ Gross profit $380,000$Operating expenses: Insurance expense $6,000$ Utility expense $30,000$ Rent expense $20,000$ Compensation expense $110,000$ Bad debt expense $6,350$ Depreciation expense $38,090$ Maintenance expense $1,000$ Warranty expense $25,000$ Rental expense $($lease$)[$A$]$ Pension expense $[$B$]$ Impairment of goodwill $[$C$]$ Total operating expenses $[$D$]($Loss$)$ on sale of PPE $[$E$]$Operating income $[$F$]$Other income $($expense$)$: Interest revenue $[$G$]$ Interest expense $[$H$]$ Gain on early extinguishment of bonds$357$ Gain on sale of investment $4,000$Net income $[$I$]$Basic EPS $[$J$]$Diluted EPS $[$K$]$ Project $3\mathrm{.}3$ Balance Sheet & Income Statement Part IIIPlease enter answers for blank journal items in the following Balance Sheet and Income Statement for $20$X$1$ and $20$X$2.$ Note that for the purpose of preparing the Balance Sheet at the end of each year: For investments, you need to classify whether they are current assets $($i$.$e$.,$ short$-$term investment$)$ or non$-$current assets $($i$.$e$.,$ long$-$term investment$)$; For bonds, you need to determine what portion of the bonds payable is current liability and what portion is non$-$current liability. Current portion of the bonds payable is the principal payment portion of the cash interest payments in the next year. Non$-$current portion is the remaining amount of the bonds payable; and For leases $($as the lessee$),$ you need to determine what portion of the lease obligation is current liability and what portion is non$-$current liability. Current portion of the lease obligation is the principal payment portion of the cash lease payment in the next year $($i$.$e$.,$ the amortization amount of the lease obligation in the next year$).$ Non$-$current portion is the remaining amount of the lease liability.Illini Company, Inc.Balance Sheet $12/31/20$X$112/31/20$X$2$Assets Current Assets: Cash $$1,336,056$$$1,922,356$ Short$-$term investment $[$A$][$B$]$ Accounts receivable, net of allowance$34,15067,800$ Interest Receivable $9,6366,999$ Prepaid insurance $6,0000$ Inventory $310,00050,000$Total current assets $1,733,8412,047,155$Long$-$term investment $[$C$][$D$]$PPE$,$ net $142,30057,500$ROU assets, net $137,076101,345$Investment in lease $[$E$][$F$]$Brand asset $016,000$Goodwill $[$G$][$H$]$Total assets $[$I$][$J$]$Liabilities and shareholders' equity Current liabilities: Wage payable $[$K$][$L$]$ Unearned revenue $050,000$ Estimated warranty liability$11,0006,000$ Accrued interest $12,7049,445$ Current portion of long$-$term bonds$[$M$][$N$]$ Current portion of lease obligation$[$O$][$P$]$Total current liabilities $66,786121,609$Non$-$current portion of long$-$term bonds$[$Q$][$R$]$Non$-$current portion of lease obligation$[$S$][$T$]$Pension liability $2,0009,800$Total liabilities $286,437236,341$ Shareholders' equity: Common stock $[$U$][$V$]$Additional paid$-$in capital $-$ common stock$280,000316,600$Preferred stock $100,000100,000$Treasury stock $[$W$][$X$]$Retained earnings $[$Y$][$Z$]$Accumulated other comprehensive income$[$i$][$ii$]$Total shareholders' equity $1,919,1382,070,652$ Total liabilities and shareholders' equity$$2,205,575$$$2,306,9921$Financial Reporting Capstone, University of Illinois at Urbana$-$Champaign, Dept of Accountancy