Question

Weida Corporation's capital structure consists of 50,000 shares of common stock. The December 31, 2000, account balance are listed below (except as noted). All adjusting entries have been made except for the accrual of taxes(20% tax rate) 1,505,000 15,000 680,000 19,000 158,000 114,000 143,000 123,000 7,500 75,000 286,000 65,000 91,000 5,000 1,500 50,000 420,500 75,000 500,000 162,700 5,700 175,000 79,000 180,000 25,000 sales sales discounts purchases purchase discount inventory, 1/1/2000 inventory, 12/31/2000 selling expense general and administrative epenses dividend revenue loss on discontinued operations retained earning, 1/1/2000 cash accouts receivable allowance for doubtful accounts prepaid insurance office supplies land patents machinery and equipment accumulated depreciation unearned service revenue notes payable (maturity 7/1/2001) account payable common stock dividend 1. Prepare a 2000 multi-step income statement; include EPS 2. Prepare a 2000 retained earnings statement. No corrections of prior periods exist. 3. Prepare a 12/31/2000 balance sheet

Answer 1

Weida Corporation

Trial Balance

As on December 31,2000

Accounts Title	Amount	Amount
Sales		$1,505,000
Sales Discounts	$15,000
Purchases	680,000
Purchase Discount		19,000
Inventory, 1/1/2000	158,000
Inventory, 12/31/2000	114,000
Selling Expenses	143,000
General and administrative Expenses	123,000
Dividend Revenue		7,500
Loss on Discontinued Operations	75,000
Retained Earnings, 1/1/2000		286,000
Cash	65,000
Accounts Receivable	91,000
Allowance for Doubtful Accounts		5,000
Prepaid Insurance	1,500
Office Supplies	50,000
Land	420,500
Patents	75,000
Machinery and Equipment	500,000
Accumulated Depreciation		162,700
Unearned Service Revenue		5,700
Notes Payable (maturity 7/1/2001)		175,000
Accounts Payable		79,000
Common Stock		180,000
Dividend	25,000
Totals	$2,536,000	$2,424,900

1. Weida Corporation

Multi Step Income Statement

For the Year Ended December 31,2000

Accounts Title	Amount	Amount
Revenue:-
Sales	$1,505,000
Less:- Sales Discounts	(15,000)
Net Sales	$1,490,000
Less:- Cost of Goods Sold	(705,000)
Gross Profit		$785,000
Less:- Operating Expenses:-
Selling Expenses	143,000
General and Administrative Expenses	123,000
Total Operating Expenses		$(266,000)
Operating Income		$519,000
Non Operating and Others:-
Add:- Dividend Revenue		7,500
Income from Continuing Operations		$526,500
Discontinued operations:-
Less:- Loss on Discontinued Operations		(75,000)
Income Before Taxes		$451,500
Less:- Income tax Expense (20% Tax rate)		(90,300)
Net Income		$361,200

Earnings Per Share	($361,200/50,000 Shares)	$7.224

2. Weida Corporation

Statement of Retained Earnings

For the Year Ended December 31,2000

Accounts Title	Amount
Retained Earnings, 1/1/2000	$286,000
Less:- Dividend	(25,000)
Add:- Net Income	361,200
Retained Earnings, 12/31/2000	$622,200

3. Weida Corporation

Balance Sheet

As on December 31,2000

Accounts Title	Amount	Amount
Assets:-
Current Assets:-
Cash	65,000
Accounts Receivable	91,000
Less:- Allowance for Doubtful Accounts	(5,000)
Prepaid Insurance	1,500
Office Supplies	50,000
Total Current Assets		$202,500
Fixed Assets:-
Land	420,500
Machinery and Equipment	500,000
Less:- Accumulated Depreciation	(162,700)
Total Fixed Assets		$757,800
Intangible Assets:-
Patents	75,000
Total Intangible Assets		$75,000
Total Assets		$1,035,300
Liabilities and Stockholders Equity:-
Current Liabilities:-
Accounts Payable	79,000
Unearned Service Revenue	5,700
Income tax Payable	90,300
Notes Payable (7/1/2001)	175,000
Total Current Liabilities		$350,000
Stockholders Equity:-
Common Stock	180,000
Retained Earnings, 12/31/2000	622,200
Total Stockholders Equity		$802,200
Total Liabilities and Stockholders Equity		$1,152,200

Working Notes:-

Calculations for Cost of Goods Sold:-

Inventory, 1/1/2000	$158,000
Add:- Purchases	680,000
Less:- Purchase Discount	(19,000)
Good Available for Sales	$819,000
Less:- Inventory, 12/31/2000	(114,000)
Cost of Goods Sold	$705,000

Adjusting Entry for Income tax:-

Date	Accounts Title	Debit	Credit
12/31/2000	Income tax Expense	$90,300
	Income tax Payable		$90,300

There is a difference between Debit and Credit side of Trial Balance, So the Balance Sheet also not equal.