| 2. | | A. | Prepare a multiple-step income statement for the year endedDecember 31, 2016, concluding with earnings per share. In computingearnings per share, assume that the average number of common sharesoutstanding was 100,000 and preferred dividends were $100,000.(Round earnings per share to the nearest cent.) | ⢠| Refer to the Chart of Accounts for exact wording of accounttitles. | | ⢠| Refer to the Labels and Amount Descriptions for exact wording oftext entries. | | B. | Prepare a retained earnings statement for the year endedDecember 31, 2016. | ⢠| Refer to the Chart of Accounts for exact wording of accounttitles. | | ⢠| Refer to the Labels and Amount Descriptions for exact wordingof text entries. | | ⢠| You will need to enter the word âLessâ or âAddâ asnecessary. | |
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| C. | Prepare a balance sheet in report form as of December 31, 2016.You are not required to present the details of Preferred and CommonStock (i.e., number of shares authorized, issued and outstanding). | ⢠| Refer to the Chart of Accounts for exact wording of accounttitles. | | ⢠| Refer to the Labels and Amount Descriptions for exact wordingof text entries. | | ⢠| âLessâ , âDeductâ, âAddâ and colons will appearautomatically. | | ⢠| Available-for-sale investments should be reported as a singleasset on the balance sheet, regardless of how many accounts existin the ledger for such assets. | | ⢠| Recall that current assets are to be reported in order ofliquidity. Available-for-sale investments are considered to be moreliquid that accounts receivable. | | ⢠| Report fixed assets and paid-in capital accounts inaccount-number order. | | ⢠| Omit the description of bonds and stocks (i.e., percentagerates, due date, number of shares, etc.) | | ⢠| Enter all amounts as positive numbers, with one exception: Ifan unrealized loss has occurred, it must be reported as a negativeamount on the balance sheet. | |
| Labels In CengageNOW, a Label is a text entry that does not have anamount associated with it. | | | Current assets | | | Current liabilities | | | December 31, 2016 | | | For the Year Ended December 31, 2016 | | | Intangible assets | | | Investments | | | Less dividends | | | Long-term liabilities | | | Operating expenses | | | Other income and expenses | | | Paid-in capital | | | Add dividends | | | Property, plant, and equipment | | | Amount Descriptions In CengageNOW, an Amount Description is a text entry other thanan Account that has an amount associated with it. | | | Available-for-sale investments | | | Decrease in retained earnings | | | Excess of issue price over par | | | Gross profit | | | Income before income tax | | | Income from operations | | | Increase in retained earnings | | | Miscellaneous selling expense | | | Net income | | | Net loss | | | Retained earnings, January 1, 2016 | | | Retained earnings, December 31, 2016 | | | Sales commissions | | | Sales salaries expense | | | Store supplies expense | | | Total administrative expenses | | | Total assets | | | Total (before treasury stock) | | | Total current assets | | | Total current liabilities | | | Total liabilities | | | Total liabilities and stockholdersâ equity | | | Total long-term liabilities | | | Total investments | | | Total operating expenses | | | Total paid-in capital | | | Total property, plant, and equipment | | | Total selling expenses | | | Total stockholdersâ equity | | | Unamortized premium | | | Unamortized discount Income Statement data: | | | Advertising expense | $ 150,000 | | Cost of merchandise sold | 3,700,000 | | Delivery expense | 30,000 | | Depreciation expense-office buildings and equipment | 30,000 | | Depreciation expense-store buildings and equipment | 100,000 | | Dividend revenue | 4,500 | | Gain on sale of investments | 4,980 | | Income from Pinkberry Co. investment | 76,800 | | Income tax expense | 140,500 | | Interest expense | 21,000 | | Interest revenue | 2,720 | | Miscellaneous administrative expense | 7,500 | | Miscellaneous selling expense | 14,000 | | Office rent expense | 50,000 | | Office salaries expense | 170,000 | | Office supplies expense | 10,000 | | Sales | 5,254,000 | | Sales commissions | 185,000 | | Sales salaries expense | 385,000 | | Store supplies expense | 21,000 | Retained earnings and balance sheet data: | | | Accounts payable | $ 194,300 | | Accounts receivable | 545,000 | | Accumulated depreciationâoffice buildings and equipment | 1,580,000 | | Accumulated depreciationâstore buildings and equipment | 4,126,000 | | Allowance for doubtful accounts | 8,450 | | Available-for-sale investments (at cost) | 260,130 | | Bonds payable, 5%, due 2024 | 500,000 | | Cash | 246,000 | | Common stock, $20 par | | | (400,000 shares authorized; 100,000 shares issued, 94,600outstanding) | 2,000,000 | | Dividends: | | | Cash dividends for common stock | 155,120 | | Cash dividends for preferred stock | 100,000 | | Goodwill | 500,000 | | Income tax payable | 44,000 | | Interest receivable | 1,125 | | Investment in Pinkberry Co. stock (equity method) | 1,009,300 | | Investment in Dream Inc. bonds (long term) | 90,000 | | Merchandise inventory (December 31, 2016), | | | at lower of cost (FIFO) or market | 778,000 | | Office buildings and equipment | 4,320,000 | | Paid-in capital from sale of treasury stock | 13,000 | | Excess of issue price over par: | | | -Common | 886,800 | | -Preferred | 150,000 | | Preferred 5% stock, $80 par | | | (30,000 shares authorized; 20,000 shares issued) | 1,600,000 | | Premium on bonds payable | 19,000 | | Prepaid expenses | 27,400 | | Retained earnings, January 1, 2016 | 9,319,725 | | Store buildings and equipment | 12,560,000 | | Treasury stock | | | (5,400 shares of common stock at cost of $33 per share) | 178,200 | | Unrealized gain (loss) on available-for-sale investments | (6,500) | | Valuation allowance for available-for-sale investments | (6,500) | none X Chart of Accounts | CHART OF ACCOUNTS | | Equinox Products Inc. | | General Ledger | | ASSETS | | 110 | Cash | | 121 | Accounts Receivable | | 122 | Allowance for Doubtful Accounts | | 131 | Merchandise Inventory | | 132 | Interest Receivable | | 133 | Prepaid Expenses | | 141 | Investments-Solstice Corp. | | 142 | Investment in Pinkberry Co. Stock | | 143 | Investment in Dream Inc. Bonds | | 144 | Valuation Allowance for Available-for-Sale Investments | | 181 | Store Buildings and Equipment | | 182 | Accumulated Depreciation-Store Buildings and Equipment | | 183 | Office Buildings and Equipment | | 184 | Accumulated Depreciation-Office Buildings and Equipment | | 191 | Goodwill | | LIABILITIES | | 211 | Accounts Payable | | 221 | Income Tax Payable | | 225 | Cash Dividends Payable | | 251 | Bonds Payable | | 252 | Discount on Bonds Payable | | 253 | Premium on Bonds Payable | | EQUITY | | 311 | Preferred Stock | | 312 | Paid-in Capital in Excess of Par-Preferred Stock | | 321 | Common Stock | | 322 | Paid-in Capital in Excess of Par-Common Stock | | 331 | Retained Earnings | | 341 | Cash Dividends | | 351 | Treasury Stock | | 352 | Paid-in Capital from Sale of Treasury Stock | | 361 | Unrealized Gain (Loss) on Available-for-Sale Investments | | | REVENUE | | 410 | Sales | | 611 | Dividend Revenue | | 621 | Interest Revenue | | 631 | Income from Pinkberry Co. | | 641 | Gain on Sale of Investments | | EXPENSES | | 511 | Cost of Merchandise Sold | | 512 | Bad Debt Expense | | 520 | Sales Salaries Expense | | 521 | Sales Commissions | | 522 | Office Salaries Expense | | 531 | Advertising Expense | | 532 | Delivery Expense | | 537 | Store Supplies Expense | | 538 | Office Supplies Expense | | 539 | Office Rent Expense | | 541 | Income Tax Expense | | 551 | Depreciation Expense-Store Equipment | | 552 | Depreciation Expense-Office Equipment | | 591 | Miscellaneous Selling Expense | | 592 | Miscellaneous Administrative Expense | | 710 | Interest Expense | | 731 | Loss on Sale of Investments | | none X Labels and Amount Descriptions | Labels In CengageNOW, a Label is a text entry that does not have anamount associated with it. | | | Current assets | | | Current liabilities | | | December 31, 2016 | | | For the Year Ended December 31, 2016 | | | Intangible assets | | | Investments | | | Less dividends | | | Long-term liabilities | | | Operating expenses | | | Other income and expenses | | | Paid-in capital | | | Add dividends | | | Property, plant, and equipment | | | Amount Descriptions In CengageNOW, an Amount Description is a text entry other thanan Account that has an amount associated with it. | | | Available-for-sale investments | | | Decrease in retained earnings | | | Excess of issue price over par | | | Gross profit | | | Income before income tax | | | Income from operations | | | Increase in retained earnings | | | Miscellaneous selling expense | | | Net income | | | Net loss | | | Retained earnings, January 1, 2016 | | | Retained earnings, December 31, 2016 | | | Sales commissions | | | Sales salaries expense | | | Store supplies expense | | | Total administrative expenses | | | Total assets | | | Total (before treasury stock) | | | Total current assets | | | Total current liabilities | | | Total liabilities | | | Total liabilities and stockholdersâ equity | | | Total long-term liabilities | | | Total investments | | | Total operating expenses | | | Total paid-in capital | | | Total property, plant, and equipment | | | Total selling expenses | | | Total stockholdersâ equity | | | Unamortized premium | | | Unamortized discount | | | | | |
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