Parker Company has the following ledger accounts and adjusted balances as of December 31, 2017. All...
Parker Company has the following ledger accounts and adjusted balances as of December 31, 2017. All accounts have normal balances. Parker’s income tax rate is 20%. Parker has 300,000 shares of Common Stock authorized and 100,000 shares of Common Stock issued and outstanding.
Accounts Payable……………………………. 39,000
Accounts Receivable………………………… 270,000
Accumulated Depreciation-Building………… 75,000
Accumulated Depreciation-Equipment………. 60,000
Administrative Expenses……………………. 60,000
Allowance for Doubtful Accounts…………… 30,000
Bonds Payable……………………………….. 250,000
Building……………………………………… 750,000
Cash…………………………………………. 39,000
Common Stock……………………………… 400,000
Cost of Goods Sold…………………………. 570,000
Dividends…………………………………… 20,000
Equipment…………………………………… 290,000
Income from Operations of Division X…….. 60,000
(Division X is a component of Parker Company)
Interest Revenue…………………………….. 40,000
Inventory……………………………………...420,000
Land (held for future use)...…………………. 300,000
Land (used for building)…………………….. 165,000
Loss from Sale of Division X...........................120,000 (Division X is a component of Parker Company)
Loss on Sale of Investments.……………….. .. 15,000
Mortgage Payable …………..………………. 375,000*
Paid-In Capital in Excess of Par……………...224,000
Premium on Bonds Payable………………….. 10,000
Prepaid Insurance……………………………. 15,000**
Retained Earnings, January 1, 2017………… 375,000
Sales Discounts………………………………. 30,000
Sales Returns and Allowances……………….. 50,000
Sales Revenue……………………………...1,535,000
Selling Expenses……………………………. 195,000
Trademark…………………………………… 45,000
*$25,000 of the principal comes due in 2019.
**Two years insurance paid in advance.
Instructions: Use this information to prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.
Homework Answers
| Income statement of Parker company for the year ended 31 Dec, 2017 | ||
| Particulars | Amount ($) | Amount ($) |
| Sales | 1535000 | |
| Less: Sales discounts | 30000 | |
| Less: Sales returns and allowances | 50000 | |
| Net sales | 1455000 | |
| Less: Cost of goods sold | 570000 | |
| Gross profit | 885000 | |
| Less: | ||
| Administrative expenses | 60000 | |
| Selling expenses | 195000 | |
| Loss on sale of investments | 15000 | |
| Total expenses | 270000 | |
| Add: Other income - | ||
| Interest revenue | 40000 | 40000 |
| Operating income | 655000 | |
| Add: Non-operating income | ||
| Income from operations of Division X | 60000 | |
| Less: | ||
| Loss from sale of Division X | 120000 | |
| Net income | 595000 | |
| Less: Dividends | 20000 | |
| Earnings available for common stockholders | 575000 | |
| Statement of Retained earnings of Parker Company as on 31 Dec, 2017 | |
| Particulars | Amount ($) |
| Retained earnings on 01/01/17 | 375000 |
| Add: Income for the current year | 575000 |
| Retained earnings on 12/31/17 | 950000 |
| Balance sheet of Parker Company as on 31 Dec, 2017 | ||
| Particulars | Amount ($) | Amount ($) |
| Property, plant and Equipment | ||
| Buildings | 750000 | |
| Accumulated depreciation - Buildings | -75000 | 675000 |
| Land (for future use) | 300000 | |
| Equipment | 290000 | |
| Accumulated depreciation - Equipment | -60000 | 230000 |
| Land (used for building) | 165000 | |
| Intangible assets | ||
| Trademarks | 45000 | |
| Total fixed assets | 1415000 | |
| Current assets | ||
| Accounts receivable | 270000 | |
| Less: Allowance for doubtful accounts | -30000 | 240000 |
| Cash | 39000 | |
| Inventory | 420000 | |
| Prepaid insurance | 15000 | |
| Total current assets | 714000 | |
| Total assets | 2129000 | |
| Difference in Trial Balance totals | 119000 | |
| Total | 2248000 | |
| Equity and liabilities | ||
| Shareholders' funds | ||
| Common stock | 400000 | |
| Retained earnings | 950000 | |
| Paid in capital, in excess of par | 224000 | |
| Total shareholders' funds | 1574000 | |
| Non-current liabilities | ||
| Bonds payable | 250000 | |
| Mortgage payable | 350000 | |
| Premium on bonds payable | 10000 | |
| Total non-current liabilities | 610000 | |
| Current liabilities | ||
| Accounts payable | 39000 | |
| Mortgage payable (current maturities) | 25000 | |
| Total current liabilities | 64000 | |
| Total equity and liabilities | 2248000 |
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