Comprehensive Problem 11 KLINGER CORPORATION Balance Sheet December 31, 2013 Pre

Question

Comprehensive Problem 11

KLINGER CORPORATION
Balance Sheet
December 31, 2013

Prepare an income statement.

Prepare a retained earnings statement for the year ending December 31, 2014.

Prepare a classified balance sheet as of December 31, 2014

Comprehensive Problem 11

Klinger Corporation’s balance sheet at December 31, 2013, is presented below.

KLINGER CORPORATION
Balance Sheet
December 31, 2013

Cash $25,720 Accounts payable $25,740 Accounts receivable 45,580 Common stock ($10 par) 81,600 Allowance for doubtful accounts (1,570 ) Retained earnings 137,120 Supplies 4,590 Land 43,640 Buildings 149,000 Accumulated depreciation—buildings (22,500 ) $244,460 $244,460
During 2014, the following transactions occurred.
1. On January 1, 2014, Klinger issued 1,500 shares of $50 par, 8% preferred stock for $76,500. 2. On January 1, 2014, Klinger also issued 820 shares of the $10 par value common stock for $24,700. 3. Klinger performed services for $329,000 on account. 4. On April 1, 2014, Klinger collected fees of $37,200 in advance for services to be performed from April 1, 2014, to March 31, 2015. 5. Klinger collected $279,000 from customers on account. 6. Klinger bought $35,700 of supplies on account. 7. Klinger paid $32,000 on accounts payable. 8. Klinger reacquired 400 shares of its common stock on June 1, 2014, for $26 per share. 9. Paid other operating expenses of $187,900. 10. On December 31, 2014, Klinger declared the annual preferred stock dividend and a $1.00 per share dividend on the outstanding common stock, all payable on January 15, 2015. 11. An account receivable of $1,700 which originated in 2013 is written off as uncollectible.
Adjustment data:
12. A count of supplies indicates that $5,700 of supplies remain unused at year-end. 13. Recorded revenue from item 4 above. 14. The allowance for doubtful accounts should have a balance of $3,400 at year end. 15. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $14,000. 16. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.)

Prepare an income statement.

Prepare a retained earnings statement for the year ending December 31, 2014.

Prepare a classified balance sheet as of December 31, 2014

Explanation / Answer

Working notes:

Klinger Corporation Income statement for the year ended 2014 Amount ($) Revenue A          356,900 Expenses: Supplies expenses            30,000 Other operating expenses          187,900 Bad debt expenses               4,970 Depreciation               4,500 Total B          227,370 Income before tax A-B          129,530 Less:Tax @30%            38,859 Income after tax            90,671 Less: Dividend paid- On prefereed stock    6,000 on common stock    8,580            14,580 Transferred to retained earning            76,091

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