Question

The following is a trial balance for Josephus Corporation as of and for the year ended December 31, 2018: Credit Debit S 50,000 850,000 Cash Building Accrued legal fees expense S 46,750 Patents Funiture 28,400 190,600 915,200 Cost of goods sold Common stock Treasury stock Rent expense Bonds payable Interest expense Retained earnings Gain on sale of machinery Prepaid insurance Salaries expense Discount on bonds payable 225,000 46,000 97,000 475,000 82,000 116,780 15,480 17,500 384,000 12,500 Sales 1,350,000 580,000 35,250 140,000 78,000 Accounts payable Accumulated depreciation furniture Income taxes payable Unearned revenue 327,500 1,400 Inventory Supplies inventory Dividend income Investments in trading securities Salaries payable Accounts receivable Goodwill 20,000 295,480 48,520 253,200 35,000 85,000 15,000 375,000 Depreciation expense Prepaid rent expense Land Accumulated depreciation -building Additional paid-in capital 148,000 782,000 $4,060,780 $4,060,780 Required Using the data provided on the preceding page: a. Prepare a classified balance sheet. b. Prepare a multi-step income statement. c. Show how you computed the ending retained earnings balance reported in the classified balance sheet in part a

Answer 1

a)	BALANCE SHEET
	Assets
	Current Assets:
	Cash		$          50,000
	Accounts receivable		$      2,53,200
	Inventory		$      3,27,500
	Supplies inventory		$            1,400
	Prepaid insurance		$          17,500
	Prepaid rent		$          15,000
	Investments in trading securities		$      2,95,480
	Current Assets			$       9,60,080
	Non-Current assets:
	Property, Plant and Equipment:
	Land		$      3,75,000
	Building	$     8,50,000
	Accumulated depreciation-Building	$     1,48,000	$      7,02,000
	Furniture	$     1,90,600
	Accumulated depreciation-Furniture	$        35,250	$      1,55,350
	Net property, plant and equipment		$    12,32,350
	Intangible assets:
	Goodwill	$        35,000
	Patents	$        28,400	$          63,400
	Total non current assets			$     12,95,750
	Total assets			$     22,55,830
	Total liabilities and Stockholders' equity
	Current liabilities:
	Accounts payable	580000
	Salaries payable	48520
	Unearned revenue	78000
	Accrued legal fees expense	46750
	Income taxes payable	140000
	Total current liabilities		893270
	Non-current liabilities:
	Bonds payabe	475000
	Discount on bonds payable	12500
	Total non current liabilities		462500
	Total liabilities			1355770
	Stockholders' Equity:
	Common stock	225000
	Additional paid in capital	782000
	Retained earnings (116780-177720)	-60940
			946060
	Less: Treasury stock		46000
	Stockholders' equity			900060
	Total liabilities and Stockholders' equity			2255830
b)	INCOME STATEMENT
	Sales		$    13,50,000
	Cost of goods sold		$      9,15,200
	Gross profit		$      4,34,800
	Operating expenses:
	Rent expense	$        97,000
	Salaries expense	$     3,84,000
	Depreciation expense	$        85,000	$      5,66,000
	Operating loss		$     -1,31,200
	Other income/(expense):
	Interest expense	$       -82,000
	Gain on sale of machinery	$        15,480
	Dividend income	$        20,000	$        -46,520
	Net income		$     -1,77,720
c)	Retained earnings, beginning balance	$     1,16,780
	Less:
	Net loss	$     1,77,720
	Ending balance	$       -60,940