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WestCoast Lifestyle Incorporated (WCLI) is an outdoor apparel company that began operations on January 1, 2016. The CEO of WCLI has provided you with the
WestCoast Lifestyle Incorporated (WCLI) is an outdoor apparel company that began operations on January 1, 2016. The CEO of WCLI has provided you with the following transactions:
Clothing Division
- On January 1, 2016, a $50,000 bank loan was obtained. The loan was a five-year loan and had an interest rate of 8%. The loan was to be paid back in five equal payments of $12,523 which would be made each year on January 1, starting with January 1, 2017.
- On February 28, 2016, WCLI purchased screen-printing equipment at a cost of $35,000. The equipment was expected to have a ten-year useful life and a residual value of $2,000. At the same time, the company sold some old screen-printing equipment for $5,000. These were the only depreciable assets the company had at the beginning of the year. The old equipment was purchased when the company began operations for $15,000 and no residual value. This equipment also had a ten-year useful life. WCLI uses the straight-line method of depreciation for all of their non-current assets.
- Sales for the year were $680,000 for the year of which $100,000 were credit sales.
- On January 10, 2016, $220,000 worth of inventory was purchased. A $50,000 deposit was paid with the remainder paid on June 01, 2016.
- Cost of goods sold was 30% of sales.
- On June 01, 2016, WCLI purchased 12-months worth of insurance $4,800. The full amount was paid in cash.
- Other operating expenses were $85,000, of which $65,000 were paid in cash upon receipt, the remaining would be paid in January 2017.
- The income tax rate is 30% and all taxes would be paid in March 2017.
- The sole employee was paid $67,000 all of which was paid in 2016.
REQUIRED
Prepare a multi-step income statement and a properly formatted balance sheet for the year ended December 31, 2016, in the space provided below.
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