4. An adjusted trial balance is set forth below for the Corporation following it

Question

4. An adjusted trial balance is set forth below for the Corporation following its first year of operations. ADJUSTED TRIAL BALANCE December 31, 2013 Dcbit Credit Cash 200,000 150,000 Accounts Receivable (net) Inventory 20,000 125,000 12,500 Equipment Accumulated Depreciation Accounts Payable Income Tax Payable Long Term Note Payable Common Stock Revenue 37,500 20,000 200,000 200,000 450,000 COGS 250,000 Depreciation Expense 12,500 Operating Expenses 137,500 Income Tax Expense 20,000 Dividends Paid 20,000 920,000 920,000 Prepare a Multi-Step Income Statement, Classified Balance Sheet, and Statement of Cash Flows. You can assume the equipment was purchased for cash.

Explanation / Answer

Income Statement

For the year ended December 31, 2013

Balance Sheet

December 31 2013

$ Revenue 450,000 Cost of Goods Sold 250,000 Gross Profit 200,000 Operating Expenses 137,500 Earnings before interest, taxes, depreciation / amortization 62,500 Depreciation Expense 12,500 Earnings before Interest and Taxes 50,000 Interest Expense 0 Earnings before taxes 50,000 Income Tax Expense 20,000 Net Income 30,000

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