Rockwell Wholesalers, Inc. has just completed its fourth year of business in 20X1. A set of

financial statements was prepared by the principal stockholder's eldest child, a college student

who is beginning the third week of an accounting course. Following is a list (in no systematic

order) of the items appearing in the student's balance sheet, income statement, and the retained

earnings column of the statement of stockholders' equity:

Accounts receivable $183,100 Advertising expense $ 97,300

Note receivable 36,000 Cost of goods sold 590,000

Merchandise inventory 201,900 Unearned rent revenue 4,800

Cash 99,300 Insurance expense 3,500

Paid-in capital 620,000 Unexpired insurance 2,300

Building 300,000 Accounts payable 52,500

Accumulated depreciation,

building 20,000

Interest expense

Telephone expense

Notes payable

Net income

Miscellaneous expense

Maintenance expense

500

20,000

2,500

58,626

3,400

4,800

Land 169,200

Sales 936,800

Salary expense 124,300

Retained earnings,

December 31, 20X0

164,000

Assume that the statements in which these items appear are current and complete, except for the

following matters not taken into consideration by the student:

a. Salaries of $8,500 have been earned by employees for the last half of December 20X1.

Payment by the company will be made on the next payday, January 2, 20X2.

b. Interest at 6% per annum on the Note Receivable has accrued for 2 months and is expected to

be collected by the company when the Note is due on January 31, 20X2.

OBJECTIVES 3, 5

OBJECTIVES 7, 8

c. Part of the building owned by the company was rented to a tenant on November 1, 20X1, for

6 months, payable in advance. This rent was collected in cash and is represented by the item

labeled Unearned Rent Revenue.

d. Depreciation on the building for 20X1 is $6,250.

e. Cash dividends of $60,000 were declared in December 20X1, payable in January 20X2.

f. Income tax at 40% applies to 20X1, all of which is to be paid in the early part of 20X2.

Prepare the following corrected financial statements, showing appropriate support for the dollar

amounts you compute:

1.What is the Multiple-step income statement for the year ended December 31, 20X1

2. What is The retained earnings column of the statement of stockholders' equity for the year ended

December 31, 20X1

3. What is the Classified balance sheet at December 31, 20X1