Question

Given the adjusted trial balance shown below:

1) Prepare a multi-step income statement

2) a statement of retained earnings

3) Prepare a classified balance sheet in horizontal format

Dr 155,000 35,000 3,750 6,000 2,000 7,000 10,000 100,000 54,000 25,000 10,000 75,000 Big, Inc. Adjusted Trial Balance For the year ended 12/31/16 Account Cash Accounts Receivable 5 Allowance for Doubtful Accounts Prepaid Insurance Prepaid Property Taxes Inventory Loan Receivable Building A/D - Building Equipment A/D - Equipment Investments - Accounts Payable Salaries & Wages Payable Accrued Vacation Payroll Taxes Payable Long-Term Note Payable Accrued Utilities Common Stock Retained Earnings Dividends Sales Revenue - Sprockets 6 Sales Revenue - Cogs s Cost of Goods Sold Salaries & Wages Expense Employee Benefits Expense Payroll Tax Expense Insurance Expense Rent Expense Property Tax Expense Depreciation Expense Bad Debt Expense 5 Income Tax Expense s Miscellaneous Income Miscellaneous Expense Total 24,500 8,100 2,500 750 24,000 1,500 50,000 126,460 10,000 675,000 315,000 625,000 125,000 4,600 25,000 9,500 23,000 5,000 12,500 1,750 39,510 1,250 950 1,296,810 1,296,810

Answer 1

Requirement 1:

Big, Inc.
Income Statement
For the year ended 12/31/16
Sales revenue - Sprockets		675,000
Sales revenue - Cogs		315,000
Cost of goods sold		-625,000
Gross profit		365,000
Operating expenses:
Salaries & Wages expense	125,000
Employee benefits expense	4,600
Payroll tax expense	25,000
Insuranc expense	9,500
Rent expense	23,000
Property tax expense	5,000
Depreciation expense	12,500
Bad debt expense	1,750
Total operating expenses		206,350
Operating income		158,650
Non-operating income (expense):
Miscellaneous income	1,250
Miscellaneous Expense	-950
Total non-operating income(Expense)		300
Income Before income tax		158,950
Income tax expense		-39,510
Net income		119,440

Requirement 2:

Big, Inc.
Statement of retained earnings
For the year ended 12/31/16
Retained earnings, Beginning	126,460
Net income	119,440
Dividends	-10,000
Retained earnings, Ending	235,900

Requirement 3:

Big, Inc.
Assets
At December 31,2016
Current assets:
Cash	155,000
Accounts receivable	35,000
Allowance for Doubtful Accounts	-3,750
Prepaid insurance	6,000
Prepaid property taxes	2,000
Inventory	7,000
Loan Receivable	10,000
Total current assets		211,250
Investments		75,000
Property,plant,and equipment:
Building	100,000
A/D - Building	-54,000
Equipment	25,000
A/D - Equipment	-10,000
Total property,plant,and equipment		61,000
Total Assets		347,250
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	24,500
Salaries & Wages payable	8,100
Accrued Vacation	2,500
Payroll Taxes Payable	750
Accrued utilities	1,500
Total current liabilities		37,350
Long-term note payable		24,000
Total liabilities		61,350
Stockholders' equity:
Common stock	50,000
Retained earnings	235,900
Total stockholders' Equity		285,900
Total liabilities and stockholders' equity		347,250