Question

16-1 Balance Sheet and Income Statement The Wrangle Company had the following items on its December 31, 20X0, balance sheet and 20X0 income statement (in dollars except for number of shares outstanding Cash and equivalents $ 56,000 Revenues 699,000 Notes payable 45,000 Long-term debt, excluding current portion 199,000 Accounts receivable, net 48,000 Provision for income taxes 62,000 Other long-term assets 105,000 Total Shareholder Equity Interest expense 62,000 Deferred income tax liability-long-term 47,000 Retained earnings 201,000 Income taxes payable 35,000 Cost of sales 460,000 Inventories 39,000 Prepaid expenses 15,000 Common stock (50,000 shares outstanding) 30,000 Property, plant, and equipment, at cost 575,000 Accounts payable 45,000 Interest income 18,000 Goodwill, patents, and trademarks 80.000 Current portion of long-term debt 19,000 Less: Accumulated depreciation 170,000 Selling and administrative expenses 150.000 Additional paid-in capital 1. Prepare in proper form the December 31, 20X0, balance sheet and the 20X0 income statement for Wrangle Company. Calculate the amount for shareholder equity and additional paid-in capital. 16-2 Statement of Cash Flows, Direct Method Ridgewood Antiques had a cash balance on December 31, 20X0, of $45.000. Its net income for 20XI was $375,000 Its 20Xl transactions affecting income or cash were (in thousands): 1. Sales of $1,560, all on credit. Cash collections from customers, $1,300. 2. The cost of items sold, $875. Purchases of inventory totaled $900; inventory and accounts payable were affected accordingly. 3. Cash payments on trade accounts payable, $800. 4. Salaries and wages: accrued, $175. paid in cash, S160. 5. Depreciation, $42. 6. Interest expense, all paid in cash, SII. 7. Other expenses, all paid in cash, $110. & Income taxes accrued, $40; income taxes paid in cash, $35. 9. Bought plant and facilities for $255 cash. 10. Issued debt for $115 cash. 11. Paid cash dividends of $49. A. Prepare a statement of cash flows using the direct method for reporting cash flows from operating activities. (Omit any supporting schedules). 16-3 Reconciliation of Net Income and Net Cash Provided by Operating Activities Refer to Problem 16-2 Prepare a supporting schedule that reconciles net income to net cash provided by operating activities for Ridgewood Antiques. 16-4 Cash Provided by Operations KMART Corporation had net earnings of $2,876 million in the fiscal year ending January 31, 2010. Additional information follows in millions): Year Ended January 31, 2011 Depreciation and amortization Bad debt expense Non-cash losses Other noncash charges affecting earnings S2.185 $ 154 S 40 $ 100

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Answer 1

For preparing Balance sheet we first need to prepare the Income Statement and Retained Earnings Statement Wrangle Company Income Statement For the Year Ending December 31,20x0 Revenues 699,000 Less Cost of Sales 460,000 Gross Profit 239,000 Less expenses Selling and adminstrative expenses 150,000 Operating Income 89,000 Other Incomes and expenses) Interest Income 18,000 Interest expense (62,000) (44,000) Income Before Tax 45,000 Provision for Income Tax 62,000 Net Income (Loss) (17,000)

Wrangle Company Statement of Retained Earnings For the Year Ending December 31,20x0 Beginning Balance of Retained earnings 201,000 Less Net Loss (17,000) Dividend (17,000) Ending Balance of Retained Earnings 184,000

56,000 48,000 39,000 15,000 Wrangle Company Classified Balance Sheet As on December 31,20x0 Assets Current Assets Cash and equivalents Accounts Receivable.net Inventories Prepaid expenses Total Current Assets Noncurrent Assets; Property, plant and Equipment, at Cost 575,000 Less Accumulated Depreciation (170,000) Property, plant and Equipment, net Goodwill, Patents and Trademarks Other Long term Assets Total noncurrent assets Total Assets 158,000 405,000 80,000 105,000 590,000 748,000

45,000 45,000 35,000 19,000 100 144,000 102 Liabilities and Shareholder's Equity Current Liabilities; Accounts Payable Notes Payable Income Taxes Payable Current Portion of Long term Debt Total Current Liabilities Noncurrent Liabilities; Long term debt, excluding current portion Deferred Income Tax Liability Total noncurrent Liabilities Total Liabilities Shareholder's Equity Common Stock Additional Paid In Capital Retained Earnings Total Shareholder's Equity Total Liabilities and Shareholder's Equity 199000 47,000 246,000 390,000 106 107 108 30,000 144,000 184,000 110 111 358,000 748,000 112 Shareolder's Equity = 748000-390000 113 114 115 116 117 358000

118 Additional Paid In Capital = 358000-30000-184000 144000 121 122 123 Note; As per rule I have answered the first question