Question

prepare: Use the following accounts and balances to L. Multi-step Income Statement 2. Statement of Retained Earnings 3. Classified Balance Sheet Account Amount Account Amount Accounts payable S38 500 Loss on sale of equipment S 20,000 Accounts receivable 450,000 Marketable securities $ 30,000 8000Miscellaneous administrative expense S 6,000 depreciation-office equipmentS Accum, de Advertising expense Allowance for Doubtful Accounts Bonds Payable epreciation-store equipment$ 87500 S 420,000 Note payable (due June 2019) $9,000 payable (final payment due 2022) 5 36,000 15,000Notes Receivable $ 100000 Office equipment s 50,00 s 220,000 S 540,000 5 10,000 S 4,000 S 12.000 Cash $92000Office salaries expense 75.000Office supplies ommon stock Cost of goods sold Delivery expense Depreciation expense-office Depredation expense-store Discount on Bonds Payable Dividends 5,620,000Office supplies expense 18000 Prepaid expenses 10000 Rent expense-Office 33000 Retained eamings $1,421,000 S 6,800 3,000 300,000 Insurance expense Interest income Inventory 24,000Sales salaries expense S 850,000 5 650,000 8 store equipment asury stock Unearned Revenue $ 25,000 S 5.200 Page 1 of 4

Answer 1

INCOME STATEMENT

Revenue
	Gross sales	8,925,000
	(Less sales returns and allowances)	-
	Net Sales	8,925,000
Cost of Goods Sold
	(Less ending inventory)	5,620,000
	Gross Profit (Loss)	5,620,000
Expenses
	Advertising	420,000
	Bad debt	15,000
	Depreciation	43,000
	Insurance	24,000
	Office supplies	20,000
	Rent	48,000
	Salaries and wages	540,000
	Sales salay expenses	850,000
	delivery expeses	18,000
	Total Operating Expenses	1,978,000
Operating Income (Loss)		3,642,000
	Non-operating revenues, expenses, gains, losses	8,000
	Loss On Sale of asset	(20,000)
	(Less interest expense)	-
	Income Before Taxes	3,630,000
	(Less income tax expense)	-
Income From Continuing Operations		3,630,000
	{42}
Below-the-Line Items
	Income from discontinued operations
	Extraordinary items
	Cumulative effect of accounting changes
Net Income		3,630,000

BALANCE SHEET

Assets		2012
Current Assets
	Cash	92,000
	Accounts receivable	500,000
	Inventory	310,000
	Prepaid expenses	12,000
	Treasury Stock	25,000
	Short-term investments	30,000
Total current assets		969,000
Fixed (Long-Term) Assets
	Long-term investments
	Property, plant, and equipment	724,500
	(Less accumulated depreciation)	-
	Intangible assets
Total fixed assets		724,500
Other Assets
	Deferred income tax
	Other
Total Other Assets		-
Total Assets		1,693,500
Liabilities and Owner's Equity
Current Liabilities
	Accounts payable	38,500
	Short-term loans	9,000
	Income taxes payable	-
	Accrued salaries and wages
	Unearned revenue	5,200
	Salaries payable	6,800
	Current portion of long-term debt
Total current liabilities		59,500
Long-Term Liabilities
	Long-term debt	136,000
	Deferred income tax
	Other
Total long-term liabilities		136,000
Owner's Equity
	Owner's investment	75,000
	Retained earnings	1,421,000
	Other
Total owner's equity		1,496,000
Total Liabilities and Owner's Equity		1,691,500
Common Financial Ratios
Debt Ratio (Total Liabilities / Total Assets)		0.12
Current Ratio (Current Assets / Current Liabilities)		16.29
Working Capital (Current Assets - Current Liabilities)		909,500
Assets-to-Equity Ratio (Total Assets / Owner's Equity)		1.13
Debt-to-Equity Ratio (Total Liabilities / Owner's Equity)		0.1