PART 1: Analysis and Entering of Data 2. Enter the information in Figures 1 and 2 following the correct formats. File Home Insert Page Layout Formulas Data Review View Help 04 X V A B C D E Lan Services Incorporated 2 Income Statement 3 For the Year Ended December 31, 2020 4 Sales revenue P 507,000 5 Cost of Goods Sold 150,000 6 Operating expenses (excluding depreciation) 111,000 7 Depreciation expense 9,000 8 Loss on disposal fo plant assets 3,000 9 Interest expense 42,000 315,000 10 Income before income taxes P 192,000 11 Income tax expense 47,000 12 Net income P 145,000 13 Figure 1. Income StatementAdditional information: 1. Depreciation expense was comprised of P6,000 for building and P3,000 for equipment. 2. The company sold equipment with a book value of P7,000 (cost P8,000, less accumulated depreciation fo P1,000) for cash. 3. The company issued P110,000 of long-term bonds in direct exchange for land. 4. A building costing P120,000 was purchased for cash. Equipment costing P25,000 was also purchased for cash. 5. The company declared P29,000 cash dividend. File Home Insert Page Layout Formulas Data Review View Help 03 X V A B C D E F G H Lan Services Incorporated Comparative Statement of Financial Position December 31, 2020 Change in Account Balance Assets 2020 2019 Increase/Decrease Current assets Cash 55,000 B 33,000 22,000 Increase Accounts receivable 20,000 30,000 10,000 Decrease Inventory 15,000 10,000 5,000 Increase Prepaid expenses 5,000 1,000 4,000 Increase Property, plant, and equipment Land 130,000 20,000 110,000 Increase Buildings 160,000 40,000 120,000 Increase Accumulated depreciation - buildings (11,000) (5,000) 6,000 Increase Equipment 27,000 10,000 17,000 Increase Accumulated depreciation - equipment (3,000) (1,000) 2,000 Increase Total assets 398,000 138,000 Liabilities and Stockholders' Equity Current liabilities Accounts payable 28,000 12,000 16,000 Increase Income taxes payable 6,000 8,000 2,000 Decrease Long-term liabilities Bonds payable 130,000 20,000 110,000 Increase 4 Stockholders' equity Common stock 70,000 50,000 20,000 Increase Retained earnings 164,000 48,000 116,000 Increase Total liabilities and stockholders equity 398,000 138,000 Figure 2. Comparative Statement of Financial Position3. Determine the reconciling items by preparing entries for each account: a. Accounts receivable b. Inventory C. Prepaid expenses d. Land e. Buildings f . Purchase of equipment g. Sale of equipment h. Accounts payable i. Income taxes payable Common stock k. Depreciation expense for buildings I. Depreciation expense for equipment m. Increase in retained earnings due to net income n. Payment of dividends o. Increase in cash Debit Credit 8. Operating - Decrease in Accounts Receivable Accounts Payable Inventory Operating - Increase in Inventory C. Prepaid Expenses Operating - Increase in Prepaid Expenses Figure 3. Reconciling ItemsPART 3: Worksheet Preparation 4. Enter in the balance sheet accounts section the statement of financial position accounts and their beginning and ending balances. 5. Enter in the reconciling columns of the worksheet the data that explain the changes in balance sheet accounts other than cash and their effects on the statement of cash flows 6. Enter on the cash line and at the bottom of the worksheet, the increase or decrease in cash. The totals of debit and credit entries or the reconciling items should be equal. Lan Services Incorporated Worksheet Statement of Cash Flows for the Year Ended December 31, 2020 Reconciling Items Balance Balance Balance Sheet Accounts 12/31/19 Debit Credit 12/31/20 Debits Cash Accounts Receivable Inventory Prepaid Expenses Land Buildings Equipment Tota Credits Accounts Payable Income Tax Payable Bonds Payable Accumulated Depreciation - Buildings Accumulated Depreciation - Equipment Common Stock Retained Earnings Total Statement of Cash Flows Effects Operating activities Net income Decrease in accounts receivable Increase in inventory Increase in prepaid expenses Increase in accounts payable Decrease in income taxes payable Depreciation expense Loss on disposal of plant assets Investing activities Purchase of building Purchase of equipment Sale of equipment Financing activities Issuance of common stock Payment of dividend Totals Increase in cash Totals *significant noncash investing and financing activity Figure 4. Worksheet