Question

Problem 3-70A Part II Comprehensive Problem: Reviewing the Accounting Cycle Tarkington Freight Service provides delivery of merchandise to retail grocery stores in the Northeast. The company accountant has posted all the transactions to T-accounts as well as generating the journal and adjusting entries. Required: The following is a list of accounts and their ending balances. Using the data, prepare Takington's financial statements. Accounts Payable Accounts Receivable Accum. Depr. (Building) Accum. Depr. (Equipment) Advertising Expense Building (Warehouse) Cash Common Stock Depreciation Expense Dividends Equipment Income Taxes Expense Income Taxes Payable 5,600 286,172 350,000 725,000 125,226 2,190,000 2,012,324 1,400,000 215,000 25,000 795,000 482,549 482,549 Interest Expense Interest Payable Land Notes Payable Prepaid Advertising Property Taxes Expense Retained Earnings Service Revenue Supplies Expense Supplies Wages Expense Wages Payable 60,000 30,000 304,975 1,000,000 14,874 170,000 462,375 2,943,538 38,115 13,685 726,700 60,558 3. Prepare an income statement Note: For grouped values (e.g. revenues or expenses), enter individual amounts as positive values. If the total for the group is subtracted or an overall negative amount, enter using a minus sign. Tarkington Freight Service Income Statement For the Year Ended December 31, 2019 s Expenses 4. Prepare a retained earnings statement. Tarkington Freight Service Retained Earnings Statement For the Year Ended December 31, 2019

Answer 1

3.

Takington Freight Services
Income Statement
For the year ended December 31, 2019
Service Revenue		$ 29,43,538
Expenses
Advertising expenses	$ 1,25,226
Depreciation expense	$ 2,15,000
Income tax expense	$ 4,82,549
Interest expense	$     60,000
Property tax expenses	$ 1,70,000
Supplies expense	$     38,115
Wages expense	$ 7,26,700	$ 18,17,590
Net income		$ 11,25,948

4.

Takington Freight Services
Retained earnings statement
For the year ended December 31, 2019
Beginning balance	$      4,62,375
Add: Net income	$   11,25,948
Less: Dividends	$        -25,000
Ending balance	$   15,63,323

5.

Takington Freight Services
Balance Sheet
December 31, 2019
Assets
Current assets
Cash		$ 20,12,324
Accounts receivable		$   2,86,172
Supplies		$       13,685
Prepaid advertising		$       14,874
Total current assets			$ 23,27,055
Property, Plant and Equipment
Land		$   3,04,975
Building	$ 21,90,000
Accumulated depreciation - Building	$ -3,50,000	$ 18,40,000
Equipment	$   7,95,000
Accumulated depreciation - Equipment	$ -7,25,000	$       70,000
Total property, Plant and Equipment			$ 22,14,975
Total Assets			$ 45,42,030
Liabilities
Current liabilities
Accounts payable		$         5,600
Income tax payable		$   4,82,549
Interest payable		$       30,000
Wages payable		$       60,558
Total current liabilities			$   5,78,707
Long term liabilities
Notes payable			$ 10,00,000
Total liabilities			$ 15,78,707
Stockholders Equity
Stockholders Equity
Common Stock		$ 14,00,000
Retained earnings		$ 15,63,323
Total Stockholders Equity			$ 29,63,323
Total liabilities and Stockholders Equity			$ 45,42,030

6.

Dec-31	Service Revenue	$ 29,43,538.00
	Income summary		$ 29,43,538.00
	(Close revenue account)
Dec-31	Income summary	$ 18,17,590.00
	Advertising expenses		$    1,25,226.00
	Depreciation expense		$    2,15,000.00
	Income tax expense		$    4,82,549.00
	Interest expense		$       60,000.00
	Property tax expenses		$    1,70,000.00
	Supplies expense		$       38,115.00
	Wages expense		$    7,26,700.00
	(Close expense account)
Dec-31	Income summary	$ 11,25,948.00
	Retained earnings		$ 11,25,948.00
	(Close Income Summary)
Dec-31	Dividends	$       25,000.00
	Income summary		$       25,000.00
	(Close dividends)

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