Problem 1: Excellent Company provided the following financial statements based on historical cost: Excellent Company Statement of Financial Position December 31, 2020 Assets 2020 2019 Cash 450.000 400.000 Accounts receivable 600.000 450.000 Allowance for doubtful accounts 20.000 (30,000) Inventories 100.000 350.000 Land 200.000 200.000 Building 500.000 600.000 Accumulated depreciation 240,000) 200,000) Equipment 800.000 800.000 Accumulated depreciation (320,000) (240.000) Total Assets 2.370.000 2.330,000 Liabilities and Stockholders' Equity Accounts payable 250.000 300.000 Bonds Payable 500.000 500.000 Share capital 1,000,000 1,000,000 Retained earnings 620.000 530.000 Total liabilities and stockholders' equity 2.370,000 2.330,000 Excellent Company Statement of Income and Retained Earnings Year ended December 31, 2020 Sales 3,000,000 Less: Cost of goods sold : Inventory, January 1 350.000 Purchases 1.900,000 Goods available for sale 2.250,000 inventory, December 31 300.000 1,950,000 Gross Profit 1,050,000 Less: Expenses Distribution and administrative expenses 600.000 Depreciation expense - building 40.000 Depreciation expense - equipment 80.000 Interest expense 30.000 750.000 Income before income tax 800,000 Less: Income tax 75.000 Net income 225.000 Retained earnings, January 1 530.000 Total 755.000 Less: Dividends paid, July 1 135,000 Retained earnings, December 31 620.000