Western Resources						Western Resources
Balance Sheet						Income Statement
At December 31, 20X5						For the Period Ended December 31, 20X5
Assets		20X5		20X4
Current assets						Sales Revenue	$	23,500,000
Cash	$	808,000	$	173,000		Cost of Goods Sold		(18,500,000)
Accounts receivable		2,475,000		1,400,000		Gross Profit	$	5,000,000
Allowance for Doubftul Accounts		(297,000)		(168,000)
Inventory		2,850,000		1,950,000		Operating Expenses:
Prepaid Rent		960,000		860,000		Rent Expense	$	(800,000)
Long-term assets						Utilities Expense		(150,000)
Land	$	4,125,000		4,200,000		Depreciation Expense		(1,250,000)
Buildings and Equipment		8,150,000		8,750,000		Bad Debts Expense		(304,000)
Accumulated Depreciation		(4,100,000)		(3,550,000)		Total Operating Expenses	$	(2,504,000)
Total assets	$	14,971,000	$	13,615,000
Liabilities and Stockholders' Equity						Other:
Current liabilities						Interest Expense	$	(600,000)
Accounts payable	$	1,250,000	$	1,100,000		Loss on Sale of Building		(100,000)
Interest payable		250,000		400,000		Gain on Sale of Land		400,000
Income taxes payable		883,400		310,000
Dividends payable		67,640		55,000		Income Before Income Taxes	$	2,196,000
Long-term liabilities						Income Tax Expense		(878,400)
Long-term debt	$	2,800,000		4,000,000		Net Income	$	1,317,600
Stockholders' Equity
Common stock	$	5,850,000		5,000,000
Retained earnings		3,869,960		2,750,000
Total liabilities and shareholders' equity	$	14,971,000	$	13,615,000

Additional information: The following journal entry was recorded during the year:

Building 600,000

Common Stock 600,000

Western Resources Balance Sheet At December 31, 20X5 20X5 $ Assets Current assets Cash Accounts receivable Allowance for Doubftul Accounts Inventory Prepaid Rent Long-term assets Land bar Buildings and Equipment Accumulated Depreciation 808,000 $ 2.475,000 (297.000) 2,850,000 960,000 $ 4,125,000 8,150.000 (4,100,000) 14,971,000 $ Western Resources Income Statement For the Period Ended December 31, 20X5 20X4 Sales Revenue 23,500,000 173,000 Cost of Goods Sold (18,500,000) 1,400,000 Gross Profit 5.000.000 (168,000) 1,950,000 Operating Expenses: 860,000 Rent Expense (800,000) Utilities Expense (150,000) 4,200,000 Depreciation Expense (1,250,000) 8,750,000 Bad Debts Expense (304,000) (3,550,000) Total Operating Expenses (2,504,000) 13,615,000 Other: Interest Expense (600,000) 1.100.000 Loss on Sale of Building (100,000) 400,000 Gain on Sale of Land 400,000 310,000 55.000 Income Before Income Taxes $ 2.196.000 Income Tax Expense (878,400) 4,000,000 Net Income 1,317,600 Total assets $ Interest payable 1,250,000 $ 250,000 883,400 67.640 Liabilities and Stockholders' Equity Current liabilities mung Accounts payable Income taxes payable Dividends payable Long-term liabilities Long-term debt Stockholders' Equity co Common stock Retained earnings Total liabilities and shareholders' equity 2,800,000 $ 5,850,000 3,869,960 14,971,000 $ 5,000,000 2,750,000 13,615,000 Additional information: The following journal entry was recorded during the year Building 600,000 Common Stock 600,000 Required: Using the balance sheet and income statement above, complete the operating section worksheet. Operating Section Worksheet Requirement Complete the operating section worksheet below. Adjustment 1 Adjustment 2 (if needed) Income Statement Sales Revenue $ 23,500,000 Cost of Goods Sold (18,500,000) Rent Expense (800,000) Utilities Expense (150.000) Depreciation Expense (1,250,000) Bad Debts Expense (304,000) Interest Expense (600,000) Gain/Loss on Sale of Building (100,000) Gain/Loss on Sale of Land 400,000 Income Tax Expense (878.400) Net Income S 1.317,600 Cash Flows $ 23,500,000 (18,500,000) (800,000) (150,000) (1.250,000) (304,000) (600,000) (100,000) 400.000 (878,400) $ 1,317,600 Operating Section Worksheet next Western Resources Balance Sheet At December 31, 20X5 20X5 $ Assets Current assets Cash Accounts receivable Allowance for Doubftul Accounts Inventory Prepaid Rent Long-term assets Land bar Buildings and Equipment Accumulated Depreciation 808,000 $ 2.475,000 (297.000) 2,850,000 960,000 $ 4,125,000 8,150.000 (4,100,000) 14,971,000 $ Western Resources Income Statement For the Period Ended December 31, 20X5 20X4 Sales Revenue 23,500,000 173,000 Cost of Goods Sold (18,500,000) 1,400,000 Gross Profit 5.000.000 (168,000) 1,950,000 Operating Expenses: 860,000 Rent Expense (800,000) Utilities Expense (150,000) 4,200,000 Depreciation Expense (1,250,000) 8,750,000 Bad Debts Expense (304,000) (3,550,000) Total Operating Expenses (2,504,000) 13,615,000 Other: Interest Expense (600,000) 1.100.000 Loss on Sale of Building (100,000) 400,000 Gain on Sale of Land 400,000 310,000 55.000 Income Before Income Taxes $ 2.196.000 Income Tax Expense (878,400) 4,000,000 Net Income 1,317,600 Total assets $ Interest payable 1,250,000 $ 250,000 883,400 67.640 Liabilities and Stockholders' Equity Current liabilities mung Accounts payable Income taxes payable Dividends payable Long-term liabilities Long-term debt Stockholders' Equity co Common stock Retained earnings Total liabilities and shareholders' equity 2,800,000 $ 5,850,000 3,869,960 14,971,000 $ 5,000,000 2,750,000 13,615,000 Additional information: The following journal entry was recorded during the year Building 600,000 Common Stock 600,000 Required: Using the balance sheet and income statement above, complete the operating section worksheet. Operating Section Worksheet Requirement Complete the operating section worksheet below. Adjustment 1 Adjustment 2 (if needed) Income Statement Sales Revenue $ 23,500,000 Cost of Goods Sold (18,500,000) Rent Expense (800,000) Utilities Expense (150.000) Depreciation Expense (1,250,000) Bad Debts Expense (304,000) Interest Expense (600,000) Gain/Loss on Sale of Building (100,000) Gain/Loss on Sale of Land 400,000 Income Tax Expense (878.400) Net Income S 1.317,600 Cash Flows $ 23,500,000 (18,500,000) (800,000) (150,000) (1.250,000) (304,000) (600,000) (100,000) 400.000 (878,400) $ 1,317,600 Operating Section Worksheet next