Part 1:

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, Year 1, were as follows:

1. Journalize the selected transactions.

If no entry is required, select "No entry required" from the dropdown. For a compound transaction, if an amount box does not require an entry, leave it blank.

Note: You must complete part 1 before part 2.

After all of the transactions for the year ended December 31, Year 1, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follows were taken from the records of Equinox Products Inc.

On your own paper, in the working papers, or using a spreadsheet, prepare the following:

a. Prepare a multiple-step income statement for the year ended December 31, Year 1, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.) Save your calculations and enter the requested amounts below.

b. Prepare a retained earnings statement for the year ended December 31, Year 1. Save your calculations and enter the requested amounts below.

c. Prepare a balance sheet in report form as of December 31, Year 1. Save your calculations and enter the requested amounts below.

If required, only use the minus sign to indicate loss before income tax, net loss, or a deficit balance in retained earnings.

a. Issued 15,000 shares of $20 par common stock at $30, receiving cash. Description Debit Credit Cash 450,000 Common Stock 300,000 Paid-In Capital in Excess of Par-Common Stock 150,000 b. Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash. Description Debit Credit Cash 400,000 Preferred Stock 320,000 Paid-In Capital in Excess of Par-Preferred Stock 80,000 C. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. Description Debit Credit Cash 520,000 Bonds Payable 500,000 Premium on Bonds Payable 20,000 d. Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held and 20,000 shares of preferred stock were outstanding. Description Debit Credit Cash Dividends 70,000 Cash Dividends Payable 70,000 Common stock Cash Dividends Payable 70,000 Cash 70,000 Preferred stock e. Paid the cash dividends declared in (d). Description Debit Credit Cash Dividends Payable 70,000 Cash Dividends 70,000 f. Purchased 7,500 shares of Solstice Corp. at $40 per share plus a $150 brokerage commission. The investment is classified as an available-for-sale investment. Description Debit Credit Investments in Solstice Corp. Stock 300,150 Cash 300,150 g. Purchased 8,000 shares of treasury common stock at $33 per share. Description Debit Credit Treasury Stock 264,000 Cash 264,000 h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for $24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. Description Debit Credit Investment in Pinkberry Co. Stock 960,000 Cash 960,000 i. Declared a $1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. Description Debit Credit Cash Dividends 20,000 Cash Dividends Payable 20,000 j. Paid the cash dividends to the preferred stockholders. Description Debit Credit Cash Dividends Payable 20,000 Cash 20,000 k. Received $27,500 dividend from Pinkberry Co. investment in (h). Description Debit Credit Cash 27,500 Investment in Pinkberry Co. Stock 27,500 I. Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of $375. The bonds are classified as a held-to-maturity long- term investment. Description Debit Credit No entry required No entry required m. Sold, at $38 per share, 2,600 shares of treasury common stock purchased in (g). Description Debit Credit Cash 98,800 Treasury Stock 85,800 Paid-In Capital from Sale of Treasury Stock 13,000 n. Received a dividend of $0.60 per share from the Solstice Corp. investment in (f). Description Debit Credit Cash 4,500 Dividend Revenue 4,500 o. Sold 1,000 shares of Solstice Corp. at $45, including commission. Description Debit Credit Cash 45,000 No entry required Investments in Solstice Corp. Stock 45,000 p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method. Description Debit Credit q. Accrued interest for three months on the Dream Inc. bonds purchased in (1). Description Debit Credit r. Pinkberry Co. recorded total earnings of $240,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. Description Debit Credit Cash Investment in Pinkberry Co. Stock s. The fair value for Solstice Corp. stock was $39.02 per share on December 31, Year 1. The investment is adjusted to fair value, using a valuation allowance account. Assume that Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero. Description Debit Credit Income statement data: Advertising expense $150,000 Cost of merchandise sold 3,700,000 Delivery expense 30,000 Depreciation expense-office buildings and equipment 30,000 Depreciation expense-store buildings and equipment 100,000 Dividend revenue 4,500 Gain on sale of investment 4,980 Income from Pinkberry Co. investment 76,800 Income tax expense 140,500 Interest expense 21,000 Interest revenue 2,720 Miscellaneous administrative expense 7,500 Miscellaneous selling expense 14,000 Office rent expense 50,000 Office salaries expense 170,000 Office supplies expense 10,000 Sales 5,254,000 Sales commissions 185,000 Sales salaries expense 385,000 Store supplies expense 21,000 If required, only use the minus sign to indicate loss before income tax, net loss, or a deficit balance in retained earnings. Gross profit $ Total selling expenses $ Total administrative expenses $ Total operating expenses $ Income from operations $ Net other expenses and income $ Income tax $ Net income $ Earnings per common share (rounded to the nearest cent) Retained earnings, January 1, Year 1 Total current assets $ Investment in Dream Inc. bonds $ Total property, plant, and equipment $ Total assets $ Total current liabilities $ Net long-term liabilities $ Total liabilities $ Total paid-in capital preferred 5% stock $ Total paid-in capital common stock, $20 par $ Total paid-in capital $ Retained earnings, December 31, Year 1 $ Total stockholders' equity $