Question

Direction: Prepare an Income statement, retained earnings statements, and balance sheet.

Income Tax Expense and Income Tax Payable have not yet been calculated . Assume the company is in a 21% tax bracket and that the 21% rate applies to all items of income or loss, including any "weird items ." Merchandise inventory at the beginning of the year was $ (you will need to analyze the Income Summary account ). For earnings per share calculations , assume that 600 shares of common stock were sold on April 1, 2019 , but no other stock was sold or purchased during the year.

The alphabetical ADJUSTED trial balance for your company on December 31, 2019, is listed below (adjusting entries for the end of the year have already been made): Debits Credits $4,070 $8,100 12,000 1,510 440 600 4,000 500 15,000 3,950 480 44,000 4,000 1,200 86,000 5,400 300 2,900 700 Accounts Payable Accounts Receivable Accumulated Depreciation - Equipment Advertising Expense Allowance for Doubtful Accounts Amortization Expense Available for Sale Securities Bad Debts Expense Bonds Payable (Due in 2024) Cash Cash Dividend Declared Common Stock, $10 par, 30,000 shares authorized Depreciation Expense Discount on Bonds Payable Equipment Franchise Freight In Gain on Sale of Assets Income Summary (from Adjusting Merchandise) Income Tax Expense Income Tax Payable Insurance Expense Interest Expense Interest Income Interest Payable Loss From Discontinued Operations Merchandise Inventory, ending Paid in Capital in Excess of Par Prepaid Insurance Purchases Rent Expense Retained Earnings Sales Sales Returns Trading Securities Utilities Expense Wages Expenses Wages Payable TOTAL $$$$ $$$$ 1,200 1,600 450 240 3,700 13,060 19,200 800 25,700 3,600 28,800 51,200 1,000 2,090 3,200 7,730 720 $179,720 $179,720

Answer 1

Answer:

Income Statement for the year ended 31 December 2019

Revenue	Rs	Expenses	Rs
Gain on sale of assets	2900	Advertising expenses	1510
Interest Income	450	Amortization Expense	600
Sales 51200 Less: Sales Return 1000	50200	Bad Debt Expense	500
Merchandise inventory , ending	13060	Depreciation Expense	4000
		Freight in	300
		Franchise	5400
		Insurance Expense	1200
		Interest Expense	1600
		Loss from discontinued operations	3700
		Rent Expense	3600
		Utilities Expense	3200
		Wages Expense	7730
		Trading securities	2090
		Purchases	25700
		Net Income	5480
	66610		66610

Balance sheet as on 31.12.2019

Liabilities	Rs	Assets	Rs
Interest payable	240	Cash in hand	3950
Bonds Payable 15000		Accounts Receivable	8100
Discount on bonds payable (1200)	13800	Equipment	86000
Accounts payable	4070	Prepaid insurance	800
Accumulated Depreciation	12000	Closing stock	13060
Cash dividend declared	480		98850
Allowance for doubtful debts	440
Wages payable	720
Common stock, $10 par, 30000 shares authorised	30000
Paid in capital	19200
Retained earnings	28800
Net Income	5480
	115230		112470