PROBLEM. The information below is for the Tom Company (which makes toy trains) for the year ending December 31, 2019. Items are listed in no particular order and are listed before tax. Tom Co. is located in a town, where tornados have never occurred.

Loss on Operations and Disposal of Discontinued Solar Powered Flashlight Division. . . . . . . $60,000 Bonds Payable (due in 2035). . . . . . . . . . . 50,000 Investment in common stock Trading (market value is $5,000; cost is $6,000) . . . . . . . 6,000 Buildings . . . . . . . . . . . . . . . . . . . 130,000 Discount on Bonds Payable. . . . . . . . . . . . 5,000 Land (Includes $15,000 of Vacant Land Being Held For Sale) . . . . . . . . . . . . . . . . 40,000 Loss of Property from Tornado. . . . . . . . . . 80,000 Selling, General & Administrative Expenses . . . 20,000 Sales Returns & Allowances . . . . . . . . . . . 50,000 Accumulated Depreciation (buildings) . . . . . . 35,000 Bond Sinking Fund . . . . . . . . . . . . . . . 1,000 Reserve for Bad Debts (accounts receivable not expected to be collected). . . . . . . . . . . 15,000 Accounts Payable . . . . . . . . . . . . . . . . 17,000 Prepaid Insurance Expense (Includes $1,000 prepaid for 2021). . . . . . . . . . . . . . . 5,000 Notes Payable(Includes $10,000 due in 2020). . . 35,000 General & Administrative Expenses . . . . . . . 95,000 Cash Surrender Value of Executive Life Insurance 5,000 Retained Earnings, January 1, 2019 . . . . . . . 60,000 Loss From Write-off of Obsolete Inventories . . 5,000 Common Stock . . . . . . . . . . . . . . . . . 50,000 Inventory . . . . . . . . . . . . . . . . . . . 40,000 Treasury Stock (Common). . . . . . . . . . . . . 5,000 Paid-in Capital in Excess of Par - Common Stock. 16,000 Interest Expense . . . . . . . . . . . . . . . 35,000 Cash & Equivalents (Includes $5,000 restricted for a long-term endowment). . . . . . . . . . 15,000 Patent (Net of $5,000 Amortization). . . . . . . 10,000 Sales Revenue . . . . . . . . . . . . . . . . . 780,000 Cash Dividends Declared & Paid . . . . . . . . . 17,000 Accounts Receivable . . . . . . . . . . . . . . 60,000 Gain on Sale of Equipment . . . . . . . . . . . 5,000 Cost of Goods Sold . . . . . . . . . . . . . . . 390,000 Notes Receivable (Includes $2,000 due in 2020) . 10,000 Gain Resulting from Correcting an Error Made in 2018 . . . . . . . . . . . . . . . . . 100,000 Investments in bonds - Held-to-Maturity (Mature in 2026; market value is $11,000, amortized cost is $10,000) . . . . . . . . . . . . . . . 10,000

Additional information: Assume a 40% tax rate and that all income statement items are shown before tax. Also, assume 20,000 shares of $5 par common stock are authorized, although only 10,000 shares are issued and 9,000 outstanding (1,000 shares were repurchased and held as treasury stock). There were no items that would be considered other comprehensive income, either in this year or in prior years. Directions: Complete in good form an income statement, statement of retained earnings, and balance sheet for the fiscal year ended Dec. 31, 2019. Make sure title and date each statement appropriately. USE THE SEPARATE EXCEL ANSWER SHEET.