The Basis for Business Decisions, 1eth Edeion COMPREHENSIVE PROBLEM 3 untain Spo

Question

The Basis for Business Decisions, 1eth Edeion COMPREHENSIVE PROBLEM 3 untain Sports, Inc. Searts, Inc., is a retailer that has engaged you to assist in the preparation of its finan at December 31. 2018. Following are the correct adjusted account balances ode, as of that date. Each balance is the "normal" balance for that account normal" balance is the same as the debit or credit side that increases the account) Accounts psyable $ 12,750 depreciatiotomce equipment onal poon capital (common stock. . … 12,000 13,000 22500 19200 18,000 100,575 5,750 2.750 Bonds pryable (due December 31, 2021), mn stock (1800 shares 10 r. Cest of goods sold Deferred income taxes Depreciation expense: offtice equipment Dividends lared. ncome tax expense . Insurance expense .. 8,190 900 39,500 17,500 Merchandise inventory Notes payable idue December 31. 2019 41,000 900 520 5,000 ,750 ,800 6,100 21,050 88,095 226,000 Office supplies Office supplies expense. Premium on bonds payable. Prepaid rent.. Rent expense Retained earmings (January 2018) Salaries expense.. Sales taxes payable Treesury stock (200 common shares at cos). Utities expense 4,120 an income statement for the year ended December 31, 2018, which includes amounts for gross profit, income before inc sold and income tax expense) in order, from the largest to the smallest dollar balance. You may ignore earnings per share b. Prepare a statement of retained earnings for the year ending December 31, 2018 t. Prepare a statement of financial position (balance sheet) as of December 31, 2018, following these guidelines: Include separate asset and liability categories for those items that are "curremt. Include and label amounts for total assets, total liabilities, otal stockholders' equity, and total liabilities and stockholders' equity Present deferred income taxes as a noncurrent liability 521 To the extent information is available that should be disclosed, include the parenthetical disclosure of that information.

Explanation / Answer

Income Statement Sales Revenue 226000 Less : Sales Returns & allowances 2500 Net sales revenue 223500 Cost of goods sold 100575 Gross profit 122925 Salary Expense 88095 Rent expense 6100 Utilities Expense 4120 Depreciation Expense 2750 Insurance Expense 900 Office supplies expenses 520 Total of Expenses 102485 Income before Income taxes 20440 Less : Income tax expense 8190 Net Income 12250 Statement of retained earnings Beginning retained earnings 21050 Add: Net Income summery 12250 Less : Dividends delcared 5000 Ending retained earnings 28300 Balance Sheet Assets Non-Current Asset Fixed Tangible Asset Land 39500 Equipment 41000 Less : Accumulated Depreciation 12000 68500 Current Asset Cash 19200 Inventory 17500 Accounts Receivable 2600 Prepaid rent 1800 Office supplies 900 Totaal current asset 42000 Total of Assets 110500 Liabilities Current Liabilities Accounts Payable 12750 Sales Tax Payable 3200 Dividends Payable 5000 Notes Payable 2500 Total of current liabilities 23450 Non current liabilities Bonds payable 13000 Premium on Bonds payable 1750 Deffered Income taxes 5750 Total of Non current liabilities 20500 Stockholder's equity Common stock -18000 shares $10 per value 18000 Additional Paid in capital -Common stock 13000 Preffered stock 250 shares $20 per value 5000 Retained earnings December 31 28300 Less : Treasury Stock(200 common shares at cost) 2250 Total stock holder's Equity 66550 Total liabilities & stockholder's equity 110500

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