Mountain Sports, Inc.

Mountain Sports, Inc., is a retailer that has engaged you to assist in the preparation of its financial statements at December $31,2021.$ Following are the correct adjusted account balances, in alphabetical order, as of that date. Each balance is the $$normal$$ balance for that account. $($Hint: The $$normal$$ balance is the same as the debit or credit side that increases the account.$)$

Accounts payable $$12,750$

Accounts receivable $2,600$

Accumulated depreciation: office equipment $12,000$

Additional paid$-$in capital $($common stock$)13,000$

Bonds payable $($due December $31,2024)22,500$

Cash $19,200$

Common stock $(1,800$ shares, $$10$ par value$)18,000$

Cost of goods sold $100,575$

Deferred income taxes $5,750$

Depreciation expense: office equipment $2,750$

Dividends declared $5,000$

Income tax expense $8,190$

Insurance expense $900$

Land $39,500$

Merchandise inventory $17,500$

Notes payable $($due December $31,2022)2,500$

Office equipment $41,000$

Office supplies $900$

Office supplies expense $520$

Preferred stock $(250$ shares, $$20$ par value$)5,000$

Premium on bonds payable $1,750$

Prepaid rent $1,800$

Rent expense $6,100$

Retained earnings $($January $2021)21,050$

Salaries expense $88,095$

Sales $226,000$

Sales returns and allowances $2,500$

Sales taxes payable $3,200$

Treasury stock $(200$ common shares at cost$)2,250$

Utilities expense $4,120$

Instructions

Prepare an income statement for the year ended December $31,2021,$ which includes amounts for gross profit, income before income taxes, and net income. List expenses $($other than cost of goods sold and income tax expense$)$ in order, from the largest to the smallest dollar balance. You may ignore earnings per share.

Prepare a statement of retained earnings for the year ending December $31,2021.$

Prepare a statement of financial position $($balance sheet$)$ as of December $31,2021,$ following these guidelines:

Include separate asset and liability categories for those items that are $$current$.$

Include and label amounts for total assets, total liabilities, total stockholders$$ equity, and total liabilities and stockholders$$ equity.

Present deferred income taxes as a noncurrent liability.

To the extent information is available that should be disclosed, include the parenthetical disclosure of that information.