Question

8. The information for Ashton Appliances for 2019 is given below. For each count: 1) write a definition explain what it is used for, 2) identify what type of account it is, 3) what it's normal balance is, and 4) which financial statement it appears on. (You should also be able to do this for any account names that have been introduced so far that don't appear in this specific problem.) Then, prepare a multiple-step income statement statement of retained earnings and a classified balance sheet as of December 31, 2019, in good form. You should be able to define all the terms that appear on the financial statements $26.400 Interest Payable 268,700 Interest Revenue 64,500 Inventory 18.000 11,000 186,000 950,400 Land 875,000 10.500 Accounts Payable Accounts Receivable Accumulated Depreciation (Building) Accumulated Depreciation (Equipment) Bonds Payable (due 2024) Building Cash Common Stock Cost of Goods Sold Depreciation Expense (Building) Depreciation Expense (Equipment) Dividends Equipment Income Taxes Expense Interest Expense 1.000.000 Prepaid Insurance 197,300 Rent Expense 22,300 Rent Payable 600,000 Retained Earnings, 12/31/2018 895,200 Sales Revenue 21,500 Supplies 46,300 Supplies Expense 25,300 Utilities Expense 1,249,000 Wages Expense 22,910 Wages Payable 236,300 14,600 2,400 69.810 1,932,300 9,800 89.100 239,400 287,200 21,600

Answer 1

i.

Ashton Appliances Income Statement For the year ended December 31, 2019
Sales Revenue		$ 1,932,300
Cost of Goods Sold		895,200
Gross Profit		1,037,100
Operating Expenses
Wages Expense	$ 287,200
Utilities Expense	239,400
Supplies Expense	89,100
Rent Expense	14,600
Depreciation Expense: Building	21,500
Depreciation Expense: Equipment	46,300
Interest Expense	236,300	934,400
Income from Operations		102,700
Other Income / Expenses
Interest Revenue		11,000
Income before Taxes		113,700
Income Tax Expense		22,910
Net Income		$ 90,790

ii.

Ashton Appliances Statement of Retained Earnings For the year ended December 31, 2019
Retained Earnings, Jan 1	$ 69,810
Add: Net income for the period	90,790
Less: Dividends	(25,300)
Retained Earnings, Dec 31	$ 135,300

iii.

Ashton Appliances Balance Sheet December 31, 2019
Assets
Current Assets
Cash		$ 22,300
Accounts Receivable		268,700
Inventory		186,000
Supplies		9,800
Prepaid Insurance		10,500
Total Current Assets			$ 497,300
Property, Plant and Equipment
Land		875,000
Buildings	197,300
Less: Accumulated Depreciation: Buildings	(64,500)	132,800
Equipment	1,249,000
Less: Accumulated Depreciation: Equipment	(950,400)	298,600	1,306,400
Total Assets			$ 1,803,700
Liabilities
Current Liabilities
Accounts Payable		26,400
Wages Payable		21,600
Rent Payable		2,400
Interest Payable		18,000
Total Current Liabilities			68,400
Long Term Liabilities
Bonds Payable			1,000,000
Total Liabilities			1,068,400
Stockholders Equity
Common Stock		600,000
Retained Earnings		135,300
Total Stockholders' Equity			735,300
Total Liabilities and Stockholders' Equity			$ 1,803,700