Problem 2.2 Based on your answer to problem 2.1, prepare an Income Statement and a Statement of Retained Earnings for the year ended December 31, 20X2, and a Statement of Financial Position as of December 31, 20x2. Problem 2.3 The following account balances are available for The Clothing Outlet, Inc., a discount retailer, as of and for the year ended December 31, 20X9, except for the retained earnings balance which is stated below as of January 1, 20X9: Cash $11,600,000 Accounts receivable .... $9,000,000 Marketable securities $4,000,000 Prepaid insurance ... $400,000 Inventory .............. ... $8,000,000 Equipment ........... $7,000,000 Accumulated depreciation equipment $3,000,000 Buildings .......... $22,000,000 Accumulated depreciation: buildings $5,000,000 Land .......... $6,000,000 Investments (long-term) $4,000,000 Accounts payable .... $9,000,000 Salaries payable $1,000,000 Dividends payable ....... $500,000 Interest payable........ S800.000 Notes payable (long-term) $11,000,000 Bonds payable (long term) Common stock $14,000,000 Retained Earnings (as of Jan. 1, 20X9) $18,000,000 Dividends declared ... $7,400,000 Sales $500,000 Cost of goods sold .... $80,000,000 Interest revenue 8.18,000,000 Interest expense $200,000 Income tax expense ....... $1.700.000 51.900.000 Page 2 of 2 o 197 words 200 English (US) Prepaid insurance.... $400,000 Inventory .......... $8,000,000 Equipment ............ $7,000,000 Accumulated depreciation: equipment $3,000,000 Buildings $22,000,000 Accumulated depreciation: buildings .... .. $5,000,000 Land .............. .. $6,000,000 Investments (long-term)... .... $4,000,000 Accounts payable ........... $9,000,000 Salaries payable... ......... $1,000,000 Dividends payable .......... ......... $500,000 Interest payable. $800,000 Notes payable (long-term) ........... $11,000,000 Bonds payable (long term) $14,000,000 Common stock .......... $18,000,000 Retained Earnings (as of Jan. 1, 20X9) $7,400,000 Dividends declared.. $500,000 Sales ... $80,000,000 Cost of goods sold...... $48,000,000 Interest revenue ... .. $200,000 Interest expense .... $1,700,000 Income tax expense..... .. $1,900,000 Selling expenses: Sales salaries and commissions 36,900,000 Insurance expense $2,100,000 Advertising expense $3,000,000 Utilities expense Depreciation expense: equipment. .. $3,000,000 $300,000 Delivery expense ............. General and administrative expenses: $500,000 Executive and administrative salaries, Utilities expense .. $5,800,000 Rental expense......... .. $3,100,000 ... Depreciation expense: buildings $600.000 Label each of the accounts listed above as an asset (A). liability (L.), permanent equity account (PE), $500,000 or temporary equity account (TE)
