1. Prepare a Multi-step Income Statement for the year ended 202 This statement should be flexibly designed (formulas) with common-sized percentages (vertical analysis) to the right of the dollars.

Your Name, Inc.

Balance Sheet

12/31/2020

Current Assets

Cash $17,000

Marketable Securities (Short-term) 2,000

Accounts Receivable 14,000

Allowance for Bad Debt (2,000)

Inventory 15,000

Prepaid Insurance 5,000

Total Current Assets $51,000

Property, Plant, and Equipment

Land $30,000

Building 150,000

Accumulated Dep. Building (45,000)

Equipment 100,000

Accumulated Dep. - Equipment (20,000)

Total PPE $215,000

Total Assets $266,000

Current Liabilities

Accounts Payable $9,000

Unearned Revenue 2,000

Income Taxes Payable 3,000

Total Current Liabilities $14,000

Long-term Liabilities

Bonds, 10%, due in 2025 $100,000

Equity

Common Stock $ 50,000

(100,000 authorized, 50,000 issued)

Additional Pd.-in Capital 80,000

Retained Earnings 22,000

Total Equity $152,000

Total Liabilities & Equity $266,000

Additional Information (for all entries; please see the posted Excel spreadsheet):

1. Sales for 2021 are $350,000. All sales are on credit.
2. Gross Margin ratio is 40 percent
3. Accounts Receivable:
   1. $300,000 of the accounts receivable is paid by the end of the year (the remaining balance remains on the balance sheet).
   2. $14,000 of A/R is written off during the year.
   3. 5% of A/R (after write-off and collections) is considered to be uncollectible.
4. Inventory:
   1. Inventory purchases are $230,000, all on credit.
   2. All accounts payable is from inventory purchases; all but $12,000 of inventory purchased is paid by the end of the year.
5. Additional equipment is purchased on 4/1/21 for $20,000 cash. All equipment when new, including the new purchase, has/had a 5-year life, no salvage value, and is depreciated using the straight-line method.
6. The building depreciates at $5,000 per year.
7. Half of the marketable securities were sold for $1,200. The FMV and cost of the other half of the securities are the same at year-end, so an adjustment to FMV is not required.
8. Salaries are $2,200 per month (12 months of salaries expense must be booked). It is expected that one-half month will be owed on 12/31/21 because of when payday falls (therefore, 11.5 months of salaries have been paid and month is still owed to the employees at year end).
9. $56,000 in cash is borrowed on 9/30/21 by issuing a Note Payable. Interest is 8% per year.
10. The bonds were sold at face value last December and pay interest on Dec. 31, 2021.
11. 10,000 additional shares of stock were sold for $3 a share.
12. Insurance costing $18,000 was purchased on 6/1/21 (the same time in which the old policy expired. The new policy was for 12 months).
13. On Dec. 31, 2021, 1000 shares of stock are repurchased from the market at $2.80/share (treasury stock).
14. The tax rate is 20 percent. Income taxes for the current year are due and therefore paid during the first two months of the next year (you will have to complete an entry to pay the 2020 taxes, however the 2021 taxes will not be paid until the end of January 2022).
15. Dividends of $3,000 were paid during 2021.
16. The unearned revenue has been earned during the year (classified as other revenue on the multi-step income stmt.)