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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.
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.
LabelsIn 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 DescriptionsIn 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)
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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
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Labels and Amount Descriptions
LabelsIn 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 DescriptionsIn 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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Deanna HettingerLv2
28 Sep 2019