Question

The following is a list of accounts of the Dienstag Company for the current year end (December 31, 2020. All of the accounts have normal balances. You are being asked to prepare an Income Statement, a statement of Retained Earnings and a classified Balance Sheet. Accounts Payable $48,000 Administrative Salary Expense $400,000 Accounts Receivable 32,000 64,000 Beginning Inventory Freight -In 56,000 48,000 Accumulated Depreciation - Building 64,000 Ending Inventory Freight-out Expense Allowance for Uncollectible Accounts 32,000 200,000 0,000 Land Land Held for Future Use Amortization Expense Bonds Payable Building 24,000 320,000 720,000 Purchases 280,000 440,000 568,000 Beginning Retained Earnings Cash Salaries Payable Common Stock Sales 56,000 400,000 120,000 56,000 40,000 25,600 16,000 1,600,000 400,000 80,000 Dividends Declared Depreciation Expense Copyright Income Taxes Payable Marketing Salary Expense Utility Expense Income Tax Expense 40% (25 points) Prepare an Income Statement in proper form using the above data.

Answer 1

Solution: 1
	INCOME STATEMENT
	Revenue :
	Sales Revenue		$       16,00,000
	Less: Cost of Goods Sold
	Beginning inventory	$               56,000
	Add: Purchases	$           4,40,000
	Add: Freight in	$               48,000
	Total Cost of Goods Available	$           5,44,000
	Less: Ending inentory	$               32,000
	Cost of Goods Sold		$          5,12,000
	Gross Revenue		$       10,88,000
	Less: Operating Expenses
	Amortization Expenses	$               24,000
	Depreciation Expenses	$               56,000
	Administrative Salary Expenses	$           4,00,000
	Marketing Salary Expenses	$           4,00,000
	Utilities Expenses	$               80,000
	Freight Out Expenses	$               64,000
	Total Expenses		$       10,24,000
	Net Income		$             64,000
	Income tax Expenses @ 40%		$             25,600
	Net Income After Taxes		$             38,400
Solution: 2
	Statement of Retained Earnings
		AMOUNT
	Beginning Balance	$           5,68,000
	Add: Net Income of the year	$               38,400
	Less: Dividends	$           1,20,000
	Ending balance of Retained Earnings	$           4,86,400
Solution: 3
	BALANCE SHEET
	ASSETS	AMOUNT	AMOUNT
	CURRENT ASSETS:
	Cash	$               56,000
	Account Receivable	$               32,000
	Ending inventory	$               32,000
	Total Current Assets		$          1,20,000
	FIXED ASSETS:
	Copyright		$             40,000
	Land		$          2,00,000
	Land Held for Future Use		$          2,80,000
	Building	$           7,20,000
	Accumulated Depreciation - Building	$               64,000	$          6,56,000
	TOTAL OF ASSETS		$       12,96,000
	LIABILITIES & SHAREHOLDER'S EQUITY	AMOUNT	AMOUNT
	CURRENT LIABILITIES:
	Account Payable	$               48,000
	Income Tax Payable	$               25,600
	Salary Payable	$               16,000
			$             89,600
	NON-CURRENT LIABILITIES:
	Bonds Payable		$          3,20,000
	Shareholder's Equity
	Common Stock	$           4,00,000
	Retained Earnings	$           4,86,400
	Total Shareholder's Equity		$          8,86,400
	TOTAL OF LIABILITES & SAHREHOLDER'S EQUITY		$       12,96,000