Question

Jan. 3 Cash 450,000.00 Common Stock 300,000.00 Paid-in Capital in Excess of Par-Common Stock 150,000.00 Feb. 15 Cash 400,000.00 Preferred Stock 20.000.00 Paid-in Capital in Excess of Par-Preferred Stock 80,000.00 May 1 Cash 20.000.00 Bonds Payable 500,000.00 20,000.00 Premium on Bonds Payable 50,000.00 May 16 Cash Dividends 10 50,000.00 Cash Dividends Payable 20,000.00 16 Cash Dividends 20,000.00 16 Cash Dividends 20,000.00 Cash Dividends Payable 70.000.00 Cash Dividends Payable May 26 70.000.00 Cash 264.000.00 un. 8 Treasury Stock 264,000.00 Cash 20,000.00 Jun. 30 Cash Dividend 20.000.00 Cash Dividends Payable 20,000.00 Jul 11 Cash Dividends Payable 20,000.00 Cash JOURNAL Score: 75/75 DATE DESCRIPTION POST. REF DEBIT CREDIT Oct.7 Cash 98,800.00 Treasury Stock 85,800.00 Paid-in Capital from Sale of Treasury Stock 13.000.00 4Oct. 31 Interest Expense 11.500.00 000.00 Premium on Bonds Payable 12.500.00 Cash Note: You must complete Comprehensive Problem 4 (Part A) before completing Comprehensive Problem 4 (Part B) Required: 1. After all of the transactions for the year ended December 31, 20Y8 had been posted ncluding the transactions recorded in part (t) and a adjusting entries), the data that follow were taken from the records of Equinox Products Inc a. Prepare a multipie-step income statement for the year ended December 31, 20Y8 Enteralil amounts as poastive numbers EXCEPTi e in the Other revenue and expense section in that secion only enter amounts that represent other expenses as negative numbers using a minus sign b Prepare a cetained earnnos statemest for the year ended December 31,208 C. Prepare a balance sheet in report form as of December 31, 20Y8 " Read the instructions above each fnancial statement carefuly They may contain specific instructions for completing the statement Income Statement data: Advertising expense S 150,000 Cost of goods sold 3,700,000 Delivery expense 30,000 Depreciation expense-office buildings and equipment 30,000 Depreciation expense-store buildings and equipment 100,000 Income tax expense 140,500 Interest expense 21.000 30.000 interest revenue 7.500 Miscellaneous administrative expense 14,000 Miscellaneous selling expense 50,000 Office rent expense 170,000 Office salaries expense 10,000 Office supplies expense 5,313,000 Sales Sales 5,313,000 Sales commissions 185,000 Sales salaries expense 385,000 Store supplies expense 21,000 Retained earnings and balance sheet data: Accounts payable S 194,300 Accounts receivable 545,000 Accumulated depreciation-office buildings and equipment 1,580,000 Accumulated depreciation-store buildings and equipment 4.126,000 Allowance for doubtful accounts 8 450 500.000 Bonds payable, 5%, due in 10 years 282.850 Cash Common stock, $20 par 2,000,000 (400,000 shares authorized, 100,000 shares issued, 94,600 outstanding) Dividends 155,120 Cash dividends for common stock 100,000 Cash dividends for preferred stock 700,000 Goodwill 44,000 Income tax payable 1,200 Interest receivable inventory (December 31, 20Y8) 778,000 at lower of cost (FIFO) or market 4 320,000 Office buildings and equipment 13,000 Paid-n capital from sale of treasury stock Excess of issue price over par 886,800 -Commorn 150,000 Preferred Preferred 5% stock S80 par (30,000 shares authorized, 20,000 shares issued) ,600,000 Premium on bonds payable 19,000 Prepaid expenses 27,400 8,197,220 Retained earnings. January 1, 20Y8 12,560,000 Store buildings and equipment Treasury stock 178.200 (5,400 shares of common stock at cost of $33 per share)

Answer 1

a.

Equinox Products Inc.
Income Statement
For the Year Ended December 31, 20Y8
Sales			5313000
Cost of goods sold			3700000
Gross profit			1613000
Expenses:
Selling expenses:
Advertising expense	150000
Delivery expense	30000
Depreciation expense-store buildings and equipment	100000
Sales commissions	185000
Sales salaries expense	385000
Store supplies expense	21000
Miscellaneous selling expense	14000
Total selling expenses		885000
Administrative expenses:
Depreciation expense-office buildings and equipment	30000
Office rent expense	50000
Office salaries expense	170000
Office supplies expense	10000
Miscellaneous administrative expense	7500
Total administrative expenses		267500
Total operating expenses			1152500
Income from operations			460500
Other revenue and expense:
Interest revenue		30000
Interest expense		-21000
Total other revenue and expense			9000
Income before income tax			469500
Income tax			140500
Net income			329000

b.

Equinox Products Inc.
Retained Earnings Statement
For the Year Ended December 31, 20Y8
Retained earnings, January 1, 20Y8			8197220
Net income		329000
Cash dividends for common stock	-155120
Cash dividends for preferred stock	-100000	-255120
Net change in retained earnings			73880
Retained earnings, December 31, 20Y8			8271100

c.

Equinox Products Inc.
Balance Sheet
December 31, 20Y8
Assets
Current assets:
Cash		282850
Accounts receivable	545000
Allowance for doubtful accounts	-8450	536550
Interest receivable		1200
Inventory		778000
Prepaid expenses		27400
Total current assets			1626000
Property, plant and equipment:
Office buildings and equipment	4320000
Accumulated depreciation-office buildings and equipment	-1580000	2740000
Store buildings and equipment	12560000
Accumulated depreciation-store buildings and equipment	-4126000	8434000
Total property, plant and equipment			11174000
Intangible assets:
Goodwill			700000
Total assets			13500000
Liabilities
Current liabilities:
Accounts payable		194300
Income tax payable		44000
Total current liabilities			238300
Bonds payable		500000
Premium on bonds payable		19000	519000
Total liabilities			757300
Stockholders' Equity
Paid-in capital:
Preferred stock	1600000
Excess of issue price over par - preferred stock	150000
Paid-in capital - preferred stock		1750000
Common stock	2000000
Excess of issue price over par - common stock	886800
Paid-in capital - common stock		2886800
Paid-in capital from sale of treasury stock		13000
Total paid-in capital		4649800
Retained earnings		8271100
Treasury stock		-178200
Total stockholders' equity			12742700
Total liabilities and stockholders' equity			13500000