The Operating Cycle and Financial Statements Presented below is the year-end 2016 balance sheet for The Little Corporation Assets THE LITTLE CORPORATION Balance Sheet December 31, 2016 Liabilities & Shareholders' Equity Current Current liabilities Cash $510,000 Accounts payable $650,000 Accounts receivable (net) 564,000 Wages payable 173,000 Inventory 720,000 Interest payable 56,000 Prepaid rent 222,000 Total current liabilities 879,000 Total current assets 2,016,000 Noncurrent liabilities Noncurrent Bank loan 450,000 Long-term investments 496,500 Bonds payable 1,950,000 Equipment $1,440,000 Total liabilities 3,279,000 Less Accum. depreciation (288,000) Shareholders' equity 1,152,000 Common stock Machinery 2,850,000 Retained earnings Less Accum. Depreciation (712,500) Total shareholders' equity 1,200,000 1,548,000 2,748,000 2,137,500 Intangible assets (net) 225,000 Total assets $6,027,000 Total liabilities & shareholders' equity $6,027,000 During 2017, the company entered into the following events: 1. Sales to customers totaled $2,000,000, of which $1,600,000 were on credit and the remainder was cash sales. The cost of goods sold totaled $800,000. 2. Purchased $700,000 of inventory on credit. 3. Paid $620,000 cash to employees as wages. (This amount includes the wages payable at December 31, 2016.) 4. Collected $1,750,000 cash from customers as payment on outstanding accounts receivable. 5. Paid $1,200,000 cash to suppliers on outstanding accounts payable. 6. Purchased machinery for $120,000 cash on January 1, 2017. 7. Paid miscellaneous expenses totaling $98,000 cash. 8. Sold common stock for $450,000 cash. 9. Invested $200,000 of excess cash in short-term marketable securities. 10. Declared and paid a cash dividend of $100,000. As part of the year-end audit, the internal audit staff identified the following additional information: 1. $180,000 of prepaid rent was consumed during the year. 2. The equipment had a useful life of 10 years and the machinery of 20 years. The company uses straight-line depreciation. 3. The intangible assets had a remaining useful life of 10 years. 4. Interest on the bank loan and bonds payable was 10 percent. During the year, interest payments totaling $260,000 had been paid in cash. Required 1. The above information has been inserted into the attached Excel spreadsheet: CLICK HERE to download this file. Offline complete the worksheet to reflect the above events and any necessary adjusting entries, and to close the revenue and expense accounts into retained earnings, and to total up each of the balance sheet accounts. Insert additional columns and rows as needed. The beginning balances have been converted to $000s. Enter all transactions and adjusting entries in $000s, and also offline, prepare the following formatted financial statements in $000s for 2017: Income Statement Statement of Retained Earnings Balance Sheet Statement of Cash Flows (After completing part 2 below you will upload your Excel file.) 2. Using the data as it shows in your formatted financial statements, insert the following amounts in $000s, rounding to one decimal place. Use negative signs with answers when appropriate. Show expenses as a positive number. (in $000s) Gross Margin Wages Expense Depreciation Expense - equipment Depreciation Expense - machinery Amortization Expense Operating Income Interest Expense Net Income/Loss Retained Earnings, Ending Balance Current Assets PPE (net) Total Assets Current Liabilities Total Shareholders' Equity Cash from Operations Cash from Investing Activities Cash from Financing Activities Cash, Ending Balance