Question

please help solve the problem, I’ve attached what I have done so far, but the only time it balances is when i dont add divends.

Flagstaff Corporation's capital structure consists of 50,000 shares of common stock. The December 31, 2020 account balances are listed below (except as noted). All adjusting entries have been made except for the accrual of taxes (20% tax rate). $1,505,000 19,000 - 681,000 75.000 143,000 65,000 92,000 180,000 162,700 7,500 - 158,000 5,800 Sales Purchase Discounts Purchases y Loss on Discontinued Operations Selling Expenses * Cash Accounts Receivable x Common Stock Accumulated Depreciation Dividend Revenue Inventory, January 1, 2020/ Unearned Service Revenue Prepaid Insurance Land Patents Retained Earnings, January 1, 2020 Sales Discounts y General and Administrative Expenses Dividends Allowance for Doubtful Accounts Notes Payable (maturity 7/1/21) Machinery and Equipment Office Supplies accounts Payable to 1,500 420,500 75,000 286,000 15,000 124,000 25,000 5,000 175,000 500,000 10.000 79,000 te: 12/31/20 Inventory is $114,000 quired a) Prepare a 2020 multi-step income statement; include EPS. Refer to the Cabrera (Illustration 4-2 and Poquito (illustration 4-8) Company examples in Chapter 4 of the text for format suggestion: (Also, refer to Illustration 4-10). Many items in these format examples are not applicable to this homework problem. Prepare a 2020 retained earnings statement. Refer to the Stricker example (illustration 4-19) Chapter 4 of the text for format suggestions. No corrections of prior periods exist. Prepare a 12/31/20 balance sheet. Refer to the Scientific Products (Illustration 5-16) example Chapter 5 of the text for format suggestions. Many items in this example are not applicable this homework problem.

Answer 1

There seems to be a mistake in Statement of Retained earnings where Dividend Paid out for $25,000 is yet to be deducted. Once It will be reduced from Opening balance of Retained earning Closing Balance of Retained earning will be $620,600. Balance sheet posted by you here is Correct. Only Statement of Retained earning needs to be updated.

Please find detailed answer of this problem as follows:

Computation of Cost of Goods Sold (COGS)
Particulars	Amount
Inventory at begining of period	$158,000
Add:
Purchases	$681,000
Freight In	$-
	$839,000
Less:
Purchase Discounts	$19,000
Inventory at end of period	$114,000
Cost of Goods Sold	$706,000

Flagstaff Corporation
Income Statement
For Period Ended December 31, 2020
	Amount	Amount
Sales		$1,505,000
Less: Sales Discount		$(15,000)
Cost of Goods Sold		$(706,000)
Gross Profit		$784,000
Operating Expense
Selling Expenses
Selling Expenses	$143,000
General And Administrative Expense	$124,000	$267,000
Total Operating Expense		$267,000
Other Revenue or Expenses
Dividends Revenue	$7,500	$7,500
Income from Continuing Operation		$524,500
Loss from Discontinuing Operation		$(75,000)
Income before Tax		$449,500
Less: Income Tax		$(89,900)
Net Income		$359,600

Statement of Retained Earning
For Period Ended December 31, 2020
Retained Earning on Jan 1, 2020		$286,000
Less: Dividend		$(25,000)
Add: Net Income		$359,600
Retained Earning on Dec 31, 2020		$620,600

Balance Sheet as on Dec 31, 2020
Particulars	Amount
Assets
Current Assets:
Cash	$65,000
Prepaid Insurance	$1,500
Accounts Receivable	$92,000
Less: Allowance for Doubtful Accounts	$(5,000)
Inventory	$114,000
Office Supplies	$50,000
Total Current Assets		$317,500
Non - Current Assets:
Property, Plant and Equipment
Land	$420,500
Machinery and Equipment	$500,000
Less: Accumulated Depreciation	$(162,700)
Total Property, Plant and Equipment		$757,800
Intangibel Asset
Patents		$75,000
Total Assets		$1,150,300
Liabilities
Current Liabilities
Accounts Payable	$79,000
Unearned Revenue	$5,800
Income Tax Payable	$89,900
Total Current Liabilities		$174,700
Non - Current Liabilities
Notes Payable (7/1/2020)		$175,000
Total Liabilities		$349,700
Shareholder's Equity
Common Stock	$180,000
Retained Earning	$620,600
Total Shareholder's Equity		$800,600
Total Liabilities and Equity		$1,150,300