It is early 2017 and you have just been hired as the financial reporting guru for TECHNOGYM, a diversified exercise/fitness corporation that has just finished a very fast-paced, dynamic year. TECHNOGYM began as the sole distributor of TechTone, a full-body fitness machine sold to fitness centers and hospitals. This remains the main operation of TECHNOGYMs business.

Your predecessor left the firm in a hurry. Your primary responsibility is to finish the 2016 year-end financial statements. Luckily, there is still time to make any necessary adjusting and closing journal entries for the 2016 fiscal year. Throughout the semester you have worked on different aspects of the companys financial records relating to: discontinued operations, revenue recognition, accounts receivable, and inventory. As you are working on the 2016 year-end, you are also reviewing the first quarter 2017 journal entries and will make any necessary correcting journal entries.

Part 1 Requirements

A. Using information in the 2016 preliminary adjusted trial balance (attached), prepare the adjusting journal entry for Income Tax Expense for the full year 2016.

B. Using information in the 2016 preliminary adjusted trial balance, combined with the adjusting entry for income taxes you did above, prepare the 2016 closing journal entries for TECHNOGYM.

C. Using information in the 2016 preliminary adjusted trial balance, combined with the adjusting entry for income taxes you did above, prepare the 2016 Balance Sheet and Income Statement (using a multi-step format) for TECHNOGYM.

2015 (prior year) Financial Statements:

Selected Ratios:

	2016 Ratio Values	2015 Ratio Values
Current Ratio	2.3	0.5
Quick Ratio	1.4	0.4
Debt-to-Assets Ratio	0.9	0.9
Times-Interest-Earned Ratio	4.3	n/a
Net Profit Margin Pct.	1.7	3.8
Return on Equity Pct.	28.8	68.4
Account Receivable Turnover	10.6	22.0
Inventory Turnover	5.2	24.1

TECHNOGYM Balance Sheet As of December 31 All amounts are in $Thousands 2015 2014 ASSETS $9,200 $5,610 Cash Accounts Receivable, Net 5,340 4,575 Inventory, Net 2,500 2,300 Assets Held For Sale 1,860 1,885 $18,900 $14,370 Subtotal Current Assets Property, Plant & Equipment, Net 22,560 36,000 TOTAL ASSETS LIABILITIES and EQUITIES $25,588 $24,507 Accounts Payable Interest Payable 18,070 2,235 Income Tax Payable 1,574 Construction Contract Liability 2,400 Liabilities Held For Sale 3.631 6.165 Subtotal Current Liabilities Common Stock 1,500 Retained Earnings 4,532 407 TOTALuABUMES and EQUITIES TECHNOGYM ncome Statement For the Years Ended December 31 All amounts are in $Thousands (except per-share amounts) 2015 2013 $108,840 $78,420 $62,736 Sales Revenue Cost of Goods Sold 51.850 33.840 42.300 Gross Profit Operating Expenses 28,584 $390 $312 Operating Income Other Revenues 17.600 12,450 9,960 (9,152] Other Expenses (17,400 (12,19 $4,630 $650 Income Before Taxes & Other terms Income Tax Expense/(Benefit) 1,574 Income from continuing operations Discontinued operating Results Loss on Sale of Discontinued oper. Tax Expense/(Benefit) from Disc. ops. 085l 681 551 $1,069 $165) $132) Discontinued operations Total NET INCOME $20.37 $A.29 $3.43 EPS-Continuing operations $7.13 $1.65 $1.32 EPS-Discontinued operations $27.50 $2.64 $2.11 EPS Net Income TECHNOGYM Balance Sheet As of December 31 All amounts are in $Thousands 2015 2014 ASSETS $9,200 $5,610 Cash Accounts Receivable, Net 5,340 4,575 Inventory, Net 2,500 2,300 Assets Held For Sale 1,860 1,885 $18,900 $14,370 Subtotal Current Assets Property, Plant & Equipment, Net 22,560 36,000 TOTAL ASSETS LIABILITIES and EQUITIES $25,588 $24,507 Accounts Payable Interest Payable 18,070 2,235 Income Tax Payable 1,574 Construction Contract Liability 2,400 Liabilities Held For Sale 3.631 6.165 Subtotal Current Liabilities Common Stock 1,500 Retained Earnings 4,532 407 TOTALuABUMES and EQUITIES TECHNOGYM ncome Statement For the Years Ended December 31 All amounts are in $Thousands (except per-share amounts) 2015 2013 $108,840 $78,420 $62,736 Sales Revenue Cost of Goods Sold 51.850 33.840 42.300 Gross Profit Operating Expenses 28,584 $390 $312 Operating Income Other Revenues 17.600 12,450 9,960 (9,152] Other Expenses (17,400 (12,19 $4,630 $650 Income Before Taxes & Other terms Income Tax Expense/(Benefit) 1,574 Income from continuing operations Discontinued operating Results Loss on Sale of Discontinued oper. Tax Expense/(Benefit) from Disc. ops. 085l 681 551 $1,069 $165) $132) Discontinued operations Total NET INCOME $20.37 $A.29 $3.43 EPS-Continuing operations $7.13 $1.65 $1.32 EPS-Discontinued operations $27.50 $2.64 $2.11 EPS Net Income