Question

The following is a trial balance for Amalgamated Corporation as of and for the year ended December 31,2018 Credit Debi $100,000 260,000 Short-term investments Furniture $282,000 27,000 Accounts payable Allowance for doubtful accounts Inventory Supplies inventory Sales returns 298,000 3,000 75,000 Prepaid insurance Copyrights Cost of goods solo Depreciation expense Accumulated depreciation-furniture Patents 4,000 88,000 1,428,000 103,000 4,000 25,000 Retained earnings Discount on bonds payable Amortization expense 15,000 64,000 6,000 250,000 425,000 Land Salaries expense Common stock 225,000 2,000 27,000 Income tax expense Loss on sale of investments Income taxes payable Prepaid utilities expense Accrued legal fees expense Interest expense Cash 115,000 2,000 67,000 82,000 145,000 Building Bonds payable Rent expense 450,000 290,000 78,000 Accumulated depreciation- building Additional paid-in capital 24,000 641,000 170,000 92,000 Accounts receivable Treasury stock Sales 2,449,000 82,000 Unearned revenue Accrued rent expense Sales discounts Utilities expense 14,000 20,000 24,000 100,000 Goodwill Dividend income 20,000 48,000 Salaries payable Gain on sale of machinery 48,000 4,541,000 4,541,000 (continued on next page) 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

Amalgamated Corporation 2 Multi -Step Income Statement For the Year Ending December 31,2018 4 Sales 2,449,000 Less Sales Return 75,000 Less Sales Discount 20,000 Net Sales 2,354,000 Less Cost of Goods Sold 1,428,000 10 Gross Profit 926,000 Operating Expenses 12 Depreciation expense 103,000 13 Amortization expense 16,000 14 Salaries expense 425,000 15 Rent expense 78,000 16 Utilities expense 24,000 Total Operating expenses 17 646,000 18 Operating Income 280,000 Other Incomes and (expenses) 19 (27,000) (82,000) Loss on sale of investments 20 21 Interest expense Dividend Income 20,000 Gain on sale of machinery 23 48,000 41,000 24 Net Income before Income Tax 239,000 25 Income Tax expense 72,000 26 Net Income 167,000

Amalgamated Corporation 28 Retained Earnings Statement 29 As on December 31,2018 Beginning Balance of Retained Earnings 15,000 Add Net Income 32 167,000 Less Dividend Paid 167,000 Ending Balance of Retained Earnings 34. 182,000 35 Amalgamated Corporation 36 Classified Balance Sheet 37 As on December 31,2018 38 Assets Cash 40 145,000 Short term Investments 100,000 Accounts Receivable 42 170,000 Allowance for Doubtful Accounts (27,000) Inventory 298,000 Supplies Inventory 45 3,000 Prepaid Insurance 46 44,000 Prepaid Utilities expense 2,000 47 Total Current Assets 48 735,000

49 Property ,Plant & Equipment Land 50 250,000 Building 51 450,000 Accumulated Dpreciation - Building (124,000) 52 53 Furniture 260,000 Accumulated Dpreciation Furniture 742,000 54 94,000 Intangibles Copyrights 56 88,000 25,000 57 Patents Goodwill 58 100,000 213,000 59 Total Assets 1,690,000 60

61 Liabilities & Shareholder's Equity Accounts Payable 282,000 62 63 Unearned Revenue 82,000 Accrued Rent expense 64 14000 Salaries Payable 48,000 Accrued Legal Fees Expense 67 Income Taxes Payable 115000 Total Current Liabilities 608,000 Long Term Liabilities 69 Bonds Payable 70 Discount on Bonds Payable 71 -164000 126000 Total Liabilities 72 734,000 Common Stock 73 Additional Paid in Capital 74 641000 Retained Earnings 75 182,000 1,048,000 76 Less Treasury Stock 92000 Total Liabilities & Stockholder's Equity 1,690,000 78 79