The following information is related to Dickinson Company for 2020. Retained earnings balance, January 1, 2020 Gain on the sale of investments Net sales Cost of goods sold Loss on disposal of wholesale division Interest revenue Loss on operations of wholesale division Selling and administrative expenses Dividends declared on common stock Write off of goodwill Dividends declared on preferred stock Loss due to flood damage Effective tax rate on all items is 20% $980,000 110,000 25,000,000 16,000,000 550,000 70,000 112.500 4,700,000 250,000 820,000 81.000 390,000 Dickinson Company decided to discontinue its entire wholesale operations and to retain their manufacturing operations. On July 1, Martin sold the wholesale operations to Rogers Company During 2020, there were 500,000 shares of common stock outstanding all year. Instructions a. Prepare a multiple-step income statement for 2020 (in good form). b. Assuming net income for 2020 is $2,053,500 and that income of S118,750 was omitted in error from the 2019 income statement, prepare a retained earnings statement in good form for 2020. PROBLEM BBB: GATOR COMPANY (30 points) Classify each of the transactions listed below as an Operating. Investing, Financing, or Significant Noncash Activity. a. Depreciation of machinery. b. Payment of cash dividends. e. Purchase of land and building. d. Purchase of treasury stock. e. Amortization of patent. f. Decrease in accounts payable during the year. g. Issuance of bonds for plant assets. h. Increase in accounts receivable during the year. i. Redemption of bonds. j. Issuance of capital stock. Spring 2020 Page 3 of 6 Presented below is the trial balance of Hightower Corporation at December 31, 2020, Debit Credit 295,000 Cash Sales Revenue $10,000,000 Debt Investments (trading) (at cost, $218,000) 230,000 Cost of Goods Sold 5,050,000 Debt Investments (long-term) 448,000 Equity Investments (long-term) 416,000 Notes Payable (short-term) 135,000 Accounts Payable 682,000 Selling Expenses 2,856,000 Investment Revenue 95,000 Land 390,000 Buildings 1,560,000 Dividends Payable 204,000 Accounts Receivable 652,000 Accumulated Depreciation-Buildings 228,000 Allowance for Doubtful Accounts 38,000 Administrative Expenses 1,350,000 Interest Expense 317,000 Inventory 895,000 Gain on Sale of Equipment 120,000 Notes Payable (long-term) 1,350,000 Equipment 900,000 Bonds Payable 1,500,000 Accumulated Depreciation Equipment 90,000 Franchises Common Stock (S5 par) 240,000 Treasury Stock 1,500,000 287,000 Patents 293,000 Retained Earnings 117,000 Paid-in Capital in Excess of Par 120,000 Totals $16.179,000 $16,179,000 Instructions Prepare the following sections of the classified balance sheet: a. Current assets (include appropriate financial statement header) b. Long-term debt c. Stockholder's equity (assume net income for the year is S650,000) Bonus: Calculate net income for the year. (Must show work to get credit.) Spring 2020 Page 4 of 6 The following information is related to Dickinson Company for 2020. Retained earnings balance, January 1, 2020 Gain on the sale of investments Net sales Cost of goods sold Loss on disposal of wholesale division Interest revenue Loss on operations of wholesale division Selling and administrative expenses Dividends declared on common stock Write off of goodwill Dividends declared on preferred stock Loss due to flood damage Effective tax rate on all items is 20% $980,000 110,000 25,000,000 16,000,000 550,000 70,000 112.500 4,700,000 250,000 820,000 81.000 390,000 Dickinson Company decided to discontinue its entire wholesale operations and to retain their manufacturing operations. On July 1, Martin sold the wholesale operations to Rogers Company During 2020, there were 500,000 shares of common stock outstanding all year. Instructions a. Prepare a multiple-step income statement for 2020 (in good form). b. Assuming net income for 2020 is $2,053,500 and that income of S118,750 was omitted in error from the 2019 income statement, prepare a retained earnings statement in good form for 2020. PROBLEM BBB: GATOR COMPANY (30 points) Classify each of the transactions listed below as an Operating. Investing, Financing, or Significant Noncash Activity. a. Depreciation of machinery. b. Payment of cash dividends. e. Purchase of land and building. d. Purchase of treasury stock. e. Amortization of patent. f. Decrease in accounts payable during the year. g. Issuance of bonds for plant assets. h. Increase in accounts receivable during the year. i. Redemption of bonds. j. Issuance of capital stock. Spring 2020 Page 3 of 6 Presented below is the trial balance of Hightower Corporation at December 31, 2020, Debit Credit 295,000 Cash Sales Revenue $10,000,000 Debt Investments (trading) (at cost, $218,000) 230,000 Cost of Goods Sold 5,050,000 Debt Investments (long-term) 448,000 Equity Investments (long-term) 416,000 Notes Payable (short-term) 135,000 Accounts Payable 682,000 Selling Expenses 2,856,000 Investment Revenue 95,000 Land 390,000 Buildings 1,560,000 Dividends Payable 204,000 Accounts Receivable 652,000 Accumulated Depreciation-Buildings 228,000 Allowance for Doubtful Accounts 38,000 Administrative Expenses 1,350,000 Interest Expense 317,000 Inventory 895,000 Gain on Sale of Equipment 120,000 Notes Payable (long-term) 1,350,000 Equipment 900,000 Bonds Payable 1,500,000 Accumulated Depreciation Equipment 90,000 Franchises Common Stock (S5 par) 240,000 Treasury Stock 1,500,000 287,000 Patents 293,000 Retained Earnings 117,000 Paid-in Capital in Excess of Par 120,000 Totals $16.179,000 $16,179,000 Instructions Prepare the following sections of the classified balance sheet: a. Current assets (include appropriate financial statement header) b. Long-term debt c. Stockholder's equity (assume net income for the year is S650,000) Bonus: Calculate net income for the year. (Must show work to get credit.) Spring 2020 Page 4 of 6