TWININGS INCORPORATED Comparative Balance Sheets June 30,2019 and 2018 20192018 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities \begin{tabular}{rr} $61,800 & $10,400 \\ 81,000 & 63,000 \\ 68,000 & 94,000 \\ 6,100 & 7,600 \\ \hline 216,900 & 175,000 \\ 195,000 & 181,000 \\ (48,000) & (16,000) \\ \hline$363,900 & $340,000 \\ \hline$31,000 & $38,000 \\ 7,000 & 17,000 \\ 4,500 & 5,000 \\ \hline 42,500 & 60,000 \\ 40,000 & 80,000 \\ \hline 82,500 & 140,000 \\ \hline \end{tabular} Equity Common stock, $5 par value Retained earnings Total liabilities and equity TWININGS INCORPORATED Income Statement For Year Ended June 30, 2019 SalesCostofgoodssoldGrossprofitOperatingexpensesDepreciationexpenseOtherexpensesTotaloperatingexpensesOthergains(losses)GainonsaleofequipmentIncomebeforetaxesIncometaxesexpenseNetincome$1,038,000635,000$03,000$7,000103,000$190,000213,0006,900219,90067,310$152,590 a. A $40,000 note payable is retired at its $40,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $85,000 cash. d. Received cash for the sale of equipment that had cost $71,000, yielding a $6,900 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. Using the income statement, the comparative balance sheet, and the additional information given above, reconstruct the entries for the summarized activity of the current fiscal year. Upon completion, the trial balance tab should agree with the June 30,2019 balances. Reconstruct the journal entry for cash receipts from customers, incorporating the change in the related balance sheet account(s), if any. Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any. Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any. Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any. (5) Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any. (6) Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any. Reconstruct the entry to record the retirement of the $40,000 note payable at its $40,000 carrying (book) value in exchange for cash. Reconstruct the entry for the purchase of new equipment. Reconstruct the entry for the issuance of common stock. Close all revenue and gain accounts to income summary. Close all expense accounts to income summary. (12) Close Income Summary to Retained Earnings. 13 Reconstruct the journal entry for cash dividends paid. Unadjusted TWININGS INCORPORATED Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities: Cash flows from investing activities: Cash flows from financing activities: Unadjusted TWININGS INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Cash flows from operating activities: Adjustments to reconcile net income to net cash provided by operating activities: Income statement items not affecting cash Changes in current operating assets and liabilities