Instructions:

1. Prepare a classified income statement for the year ended December 31, 2020 (15 points)

2. Prepare a statement of retained earnings for the year ended December 31, 2020. (10 points)

3. Prepare the companys classified balance sheet dated December 31, 2020. (20 points)

4. Determine whether the company has enough cash to pay its incoming short-term liabilities (5 points)

Problem 1 (50 points) Rex, Inc. is a clothing wholesaler. The company has provided the following trial balance dated December 31, 2020: REX INC Trial Balance December 31, 2020 $18,200 2.400 21,100 800 1,650 .51.900 $ 16,400 9.000 2,000 10,900 27,000 Cash....... Accounts receivable. Merchandise inventory Prepaid insurance Store supplies. Office equipment. Accumulated depreciation: store equipment Accounts payable. Sales tax payable Capital stock.... Retained earnings Diviends. Sales. Sales returns. Cost of goods sold.. Discounts... Utilities expense... Store supply expense. Depreciation expense: store equipment Rent expense...... Insurance expense Salaries expense. Income tax expense. 2,000 158,000 2.000 47,400 1,000 7,000 3.150 1,400 14,000 1,500 41,000 6.800 $ 223,300 $ $ 223,300