Question 5

Monty Corp.s balance sheet at December 31, 2016, is presented below.

MONTY CORP. Balance Sheet December 31, 2016 Cash $33,500 Accounts payable $13,800 Inventory 30,050 Interest payable 2,425 Prepaid insurance 5,600 Bonds payable 48,500 Equipment 39,000 Common stock 25,400 Retained earnings $18,025 $108,150 $108,150

During 2017, the following transactions occurred. Monty uses a perpetual inventory system.

1. Monty paid $2,425 interest on the bonds on January 1, 2017. 2. Monty purchased $244,300 of inventory on account. 3. Monty sold for $486,000 cash inventory which cost $268,000. Monty also collected $29,160 sales taxes. 4. Monty paid $238,000 on accounts payable. 5. Monty paid $2,425 interest on the bonds on July 1, 2017. 6. The prepaid insurance ($5,600) expired on July 31. 7. On August 1, Monty paid $10,080 for insurance coverage from August 1, 2017, through July 31, 2018. 8. Monty paid $17,000 sales taxes to the state. 9. Paid other operating expenses, $88,000. 10. Redeemed the bonds on December 31, 2017, by paying $46,600 plus $2,425 interest. 11. Issued $87,000 of 8% bonds on December 31, 2017, at 103. The bonds pay interest every June 30 and December 31.

Adjustment data:

12. Recorded the insurance expired from item 7. 13. The equipment was acquired on December 31, 2016, and will be depreciated on a straight-line basis over 5 years with a $2,800 salvage value. 14. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)

Prepare an income statement for the year ending December 31, 2017.

MONTY CORP. Income Statement choose the accounting period For the Year Ending December 31, 2017 For the Month Ending December 31, 2017 December 31, 2017 select a name for section one Dividends Gross Profit Income From Operations Income Before Income Taxes Net Income / (Loss) Net Sales Operating Expenses Other Revenues and Expenses Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Sales Revenues Total Operating Expenses Total Revenues $enter a dollar amount enter an income statement item enter a dollar amount select a summarizing line for the first part Dividends Gross Profit Income From Operations Income Before Income Taxes Net Income / (Loss) Net Sales Operating Expenses Other Revenues and Expenses Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Sales Revenues Total Operating Expenses Total Revenues enter a total amount for the first part select an opening name for section two Dividends Gross Profit Income From Operations Income Before Income Taxes Net Income / (Loss) Net Sales Operating Expenses Other Revenues and Expenses Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Sales Revenues Total Operating Expenses Total Revenues enter an income statement item $enter a dollar amount enter an income statement item enter a dollar amount enter an income statement item enter a dollar amount select a closing name for section two Dividends Gross Profit Income From Operations Income Before Income Taxes Net Income / (Loss) Net Sales Operating Expenses Other Revenues and Expenses Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Sales Revenues Total Operating Expenses Total Revenues enter a total amount for section two select a summarizing line for the second part Dividends Gross Profit Income From Operations Income Before Income Taxes Net Income / (Loss) Net Sales Operating Expenses Other Revenues and Expenses Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Sales Revenues Total Operating Expenses Total Revenues enter a total amount for the second part select an opening name for section three Dividends Gross Profit Income From Operations Income Before Income Taxes Net Income / (Loss) Net Sales Operating Expenses Other Revenues and Expenses Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Sales Revenues Total Operating Expenses Total Revenues enter an income statement item enter a dollar amount enter an income statement item enter a dollar amount select a summarizing line for the third part Dividends Gross Profit Income From Operations Income Before Income Taxes Net Income / (Loss) Net Sales Operating Expenses Other Revenues and Expenses Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Sales Revenues Total Operating Expenses Total Revenues enter a total amount for the third part enter an income statement item enter a dollar amount select a closing name for this statement Dividends Gross Profit Income From Operations Income Before Income Taxes Net Income / (Loss) Net Sales Operating Expenses Other Revenues and Expenses Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Sales Revenues Total Operating Expenses Total Revenues $enter a total net income or loss amount

Prepare a retained earnings statement for the year ending December 31, 2017.

MONTY CORP. Retained Earnings Statement choose the accounting period December 31, 2017 For the Year Ending December 31, 2017 For the Month Ending December 31, 2017 select an opening name Dividends Expenses Net Income / (Loss) Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Revenues Total Expenses Total Revenues $enter a dollar amount select between addition and deduction Add Less : select an item Dividends Expenses Net Income / (Loss) Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Revenues Total Expenses Total Revenues enter a dollar amount select a closing name Dividends Expenses Net Income / (Loss) Retained Earnings, 1/1/17 Retained Earnings, 12/31/17 Revenues Total Expenses Total Revenues $enter a total amount