Preparation of Financial Statements

Dawkins Company has the following ledger accounts and adjusted balances as of December 31, 2016. All accounts have normal balances. Dawkins' income tax rate is 40%. Dawkins has 300,000 shares of Common Stock authorized and 100,000 shares of Common Stock issued and outstanding.

Accounts Payable. 13,000

Accounts Receivable 90,000

Accumulated Depreciation-Building 25,000

Administrative Expenses. 20,000

Allowance for Doubtful Accounts 10,000

Bonds Payable (Mature 2020). 125,000

Building 200,000

Cash. 13,000

Common Stock 200,000

Cost of Goods Sold. 190,000

Dividends 10,000

Income from Operations of Division X.. 20,000

(Division X is a component of Dawkins Company)

Interest Revenue.. 10,000

Inventory.. 140,000

Land. 100,000

Loss from Earthquake.. 35,000

(unusual in nature and infrequent in occurrence)

Loss from Sale of Division X........................... 40,000

(Division X is a component of Dawkins Company)

Loss on Sale of Land.. .. 5,000

Patent 15,000

Prepaid Rent. 5,000*

Retained Earnings, January 1, 2016125,000

Sales Revenue.450,000

Selling Expenses. 65,000

*Two years rent paid in advance for offsite document storage.

Instructions:

Use this information to prepare a multiple-step income statement and a classified balance sheet.