Prepare an end of year Income Statement in good form using the following information.

1. As of December 1, 2021, ACME has recorded the following sales information:

Sales revenue $500,000

Sales discounts 1,000

On December 1, 2021, ACME sold $15,000 of merchandise with the terms of 2/10, n/30.

On December 9, 2021, ACME received payment on goods originally billed at 5,100

On December 30, 2021, ACME received payment on goods originally billed at 6,000.

ACME uses the gross price method to record sales discounts.

2. ACME estimates that returns and allowances will be 2% of gross sales revenue.

3. Selling expenses for 2021 totaled $12,100.

4. General and administrative expenses for 2021 totaled $3,000. This amount does not include depreciation expenses nor bad debt expenses.

4a. Bad debts are estimated using the percentage of credit sales method. ACME estimates that 2% of its credit sales will result in a bad debt loss. 73% of gross sales are credit sales.

4b. ACME has three depreciable items, building, equipment and machinery. ACME depreciates its building and equipment on the straight-line basis and its machinery using double-declining balance.

The building was purchased in 2005 for $1,000,000. It has a residual value of $250,000 and a useful life of 40 years.

The equipment was purchased for $50,000, January 1, 20014. It has a 10 year useful life and no residual value. At the beginning of 2021, accumulated depreciation totaled $35,000. At the end of 2021, the equipment was sold for $12,000.

The machinery was purchased July 1, 2020 for $200,000. It has no residual value and a useful life of 10 years.

5. On October 1, 2021, ACME signs/accepts a $20,500 note with no stated interest rate, due December 31, 2021. The note has a present value of $18,500. (Sales revenue is already included in the 12/1/21 amount of $500,000)

6. Cost of goods sold through November 30, 2021 totaled $50,000. Calculate the total cost of goods sold based on the following information for the month of December:

Inventory, Dec 1 30 $35

Purchases, Dec 8 60 $37

ACME sold 50 units during December. ACME uses the LIFO method and the periodic system of calculating inventory.

7. On December 1, 2021, ACME issues a $2,500, 12%, 30-day note to purchase inventory.

8. The tax rate is 30%.

9. Division X, which was discontinued on October 1, 2021 reported the following pre-tax information:

Income from operations - $8,400

Loss on disposal of Division X - $12,500

10. ACME has 100,000 shares of common stock issued and outstanding.

ACME Corporation
Income Statement
For Year Ended December 31, 2021
Sales (net)
Cost of goods sold
Gross profit
Operating expenses:
Selling expenses
General and administrative expenses
Total operating expenses
Operating income
Other items:
Interest revenue
_Gain_ on sale of equipment
Interest expense
Pretax income from continuing operations
Income tax expense
Income from continuing operations
Results from discontinued operations:
Income from operations of discontinued Division X
(net of ____30%_ income taxes)
Loss on sale of Division X
(net of ____30%____ income tax credit)
Net income
Earnings Per Share
Components of Income
Income from continuing operations
Results from discontinued operations
Net Income

ACME Corporation Balance Sheet December 31, 2021 Assets Current Assets: Cash Accounts receivable, net s 975,000 25,000 Inventories 49,000 Total Current Assets $ 1,049,000 Investment in available-for-sale stock 73,000 Land 350,000 Plant and equipment 1,250,000 Less: Accumulated depreciation 375,000 Patent 16,000 Total Assets $ 2,363,000 Liabilities and Shareholders' Equity Current Liabilities: $ 64.000 Accounts Payable 64,000 Total Current Liabilities 150,000 Note Payable, long term 160,000 Bonds Payable, long term Deferred taxes payable 41,000 $ 415,000 Total Liabilities 100,000 Common Stock, $1 par 1,416,000 Additional paid-in capital 432,000 Retained earnings Total Liabilities and Shareholder's Equity $ 2,363,000