You have been retained by Down under Company to straighten out its accounting records. The company's trusted accountant for the past 25 years suddenly retired to a tropical island in the South Pacific and, in his rush to get away, he seems to have misplaced the company's accounting records. Now the bank has asked for the latest financial statements, so it can determine whether to renew the company's loan. Luckily, you managed to find the following listing of accounts and their balances, in alphabetical order, written on the back of one of the accountant's travel brochures.
Amount invested by owners (for shares)…………………………….$20,000
Amounts due to suppliers……………………………………………. 13,000
Amounts due from customers………………………………………... 20,200
Cash in bank account…………………………………………………. 1,000
Cash on hand (in cash box) …………………………………………… 100
Cost of inventory sold to customers………………………………….. 41,000
Cost of inventory still on shelves……………………………………... 7,900
Depreciation accumulated on equipment……………………………... 4,000
Depreciation expense………………………………………………….. 2,000
Equipment (original cost)……………………………………………… 51,500
Interest expense……………………………………………………….. 500
Loan balance owed to Rational Bank………………………………….15,000
Miscellaneous expenses……………………………………………….. 8,000
Sales to customers……………………………………………………...93,600
Wages expense…………………………….……………………………27,500
Wages owed to employees (not yet paid)……………………………… 1,200
Required:
a. Based on the information available, prepare a statement of earnings for the year 2011 and a statement of financial position as at December 31, 2011. There is no amount available for retained earnings, so you will have to enter whatever amount is required to make the statement of financial position balance.
b. Identify several additional pieces of information that would be needed for preparing more complete and accurate financial statements.