Question

The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2018: Cash $109,500 Retained Earnings Dividends Accounts Receivable Inventory Estimated Returns Inventory Sales 297,200 332,900 22,500 10,300 8,000 482,700 65,600 $4,011,400 2,320,300 652,500 179,400 Office Supplies Prepaid Insurance Cost of Goods Sold Sales Salaries Expense Advertising Expense Depreciation Expense- Store Equipment Office Equipment 241,000 35,000 Miscellaneous Selling Expense 15,300 Accumulated Depreciation- Office Equipment Store Equipment Accumulated Depreciation- Store Equipment 163,800 752,400 Office Salaries Expense 356,200 Rent Expense 52,600 241,000 Accounts Payable 166,800 40,000 10,700 Depreciation Expense- Office Equipment Insurance Expense Office Supplies Expense 26,300 16,300 9,700 Customer Refunds Payable Salaries Payable Note Payable (final payment due 2024) Common Stock Miscellaneous Administrative Exp. 7,000 350,000 54,300 Interest Expense 10,700

Answer 1

1)

Clairemont Co.
Income Statement
For the Year Ended May 31, 2018
Sales			$4011400
Cost of goods sold			(2320300)
Gross margin			1691100
Expenses:
Selling expenses:
Sales salaries expense	652500
Advertising expense	179400
Depreciation expense- Store equipment	35000
Miscellaneous selling expense	15300
Total selling expenses		882200
Administrative expenses:
Office salaries expense	356200
Rent expense	52600
Depreciation expense- Office equipment	26300
Insurance expense	16300
Office supplies expense	9700
Miscellaneous administrative expenses	7000
Total administrative expenses		468100
Total operating expenses			(13503000)
Income from operations			340800
Other expenses
Interest expense			(10700)
Net income			$330100

2)

Clairemont Co.
Retained Earnings Statement
For the Year Ended May 31, 2018
Beginning Retained earnings		$482700
Add: Net income	330100
Less: Dividends	(65600)
Increase in retained earnings		264500
Ending retained earnings		$747200

3)

Clairemont Co.
Balance Sheet
May 31, 2018
Assets
Current assets:
Cash		$109500
Accounts receivable		297200
Inventory		332900
Estimated returns inventory		22500
Office supplies		10300
Prepaid insurance		8000
Total current assets			780400
Property, plant and equipment:
Office equipment	241000
Accumulated depreciation- Office equipment	(163800)	77200
Store equipment	752400
Accumulated depreciation- Store equipment	(241000)	511400
Total property, plant and equipment			588600
Total assets			$1369000
Liabilities
Current liabilities:
Accounts payable		166800
Customer refunds payable		40000
Salaries payable		10700
Notes payable (current portion)		17500
Total current liabilities			235000
Long-term liabilities
Notes payable ($350000-17500)			332500
Total liabilities			567500
Stockholders' equity
Common stock		54300
Retained earnings		747200
Total stockholders' equity			801500
Total liabilities and stockholders' equity			$1369000