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Answer:
Operating Income = $53,000
Net Income = $39,000
Ending balance of common stock = $300,000
Ending balance of retained earnings = $95,000
Ending total stockholders' equity = $395,000
Total current assets = $198,000
Net long-term assets = $265,000
Total long-term assets = $285,000
Total assets = $463,000
Total liabilities = 68,000
Explanation:
a. Multi-step Income Statement
Multi-step Income Statement put each revenues and expenditures items into different categories to show gross profit and net income. This can be prepared as follows:
Multi-step Income Statement
For the year ended
Details $
Sales Revenue 545,000
Sales Discount (45,000)
Net Sales Revenue 500,000
Cost of Goods Sold (400,000)
Gross profit 100,000
Operating expenses:
Rent Expense (12,000)
Depreciation Expense (10,000)
Salaries Expenses (25,000)
Operating Income 53,000
Non-operating expenses:
Interest Expense (6,000)
Income before tax 47,000
Income Tax Expense (8,000)
Net income 39,000
Dividend paid (4,000)
Retained earning for the year 35,000
b. Changes in Retained Earnings
Details $
Beginning retained earnings 60,000
Retained earning for the year 35,000
Ending retained earnings 95,000
c. Movement in Common Stock
Details $
Beginning balance of common stock 250,000
Additional shares issued 50,000
Ending balance of common stock 300,000
c. Statement of stockholders' equity
Details $
Beginning balance of common stock 250,000
Additional shares issued 50,000
Ending balance of common stock 300,000
Ending retained earnings 95,000
Ending total stockholders' equity 395,000
d. Classified Balance Sheet
Classified balance sheet shows each of the componets of assets, liabilities and equity. This can be prepared as follows:
Classified Balance Sheet
As at the year ended
Details $ $
Long-Term Assets
Buildings 65,000
Equipment 220,000
Total Long-Term Assets 285,000
Accumulated Depreciation 20,000
Net Long-Term Assets 265,000
Current Assets
Cash 12,000
Accounts Receivable 150,000
Supplies 36,000
Total Current Assets 198,000
Total Assets 463,000
Financed by:
Ending total stockholders' equity 395,000
Current Liability
Accounts Payable 28,000
Long-Term Liability
Notes Payable (Due in 2years) 40,000
Total Liabilities 68,000
Total Equity $ Liabilities 463,000
Conclusion
As both the Total Assets and Total Equity and Liabilities are each equal to $463,000, it implies the financial statement is accurately prepared since both must always be equal.
1. The preparation of the Multi-step Income Statement is as follows:
Sales Revenue $545,000
Sales Discount $45,000
Net Sales $500,000
Cost of Goods Sold $400,000
Gross profit $100,000
Operating Expenses:
Rent Expense $12,000
Salaries Expenses $25,000
Depreciation Expense $10,000
Total operating expense $47,000
Operating income $53,000
Interest Expense ($6,000)
Earnings before tax $47,000
Income Tax Expense $8,000
Net income $39,000
2. The Statement of Stockholders' Equity is as follows:
Common Stock $300,000
Retained earnings 95,000
Stockholders' equity $395,000
3. Classified Balance Sheet
Assets
Current Assets:
Cash $12,000
Accounts Receivable $150,000
Supplies $36,000
Total current assets $198,000
Long-term assets:
Buildings $65,000
Equipment $220,000
Accumulated Depreciation($20,000) $265,000
Total assets $463,000
Liabilities and Equity
Current Liabilities:
Accounts Payable $28,000
Long-term liabilities:
Notes Payable (Due in 2years) $40,000
Total liabilities $68,000
Equity:
Common stock $300,000
Retained Earnings $95,000 $395,000
Total liabilities and equity $463,000
Data and Calculations:
Cash $12,000
Accounts Receivable $150,000
Supplies $36,000
Buildings $65,000
Equipment $220,000
Accumulated Depreciation $20,000
Accounts Payable $28,000
Notes Payable (Due in 2years) $40,000
Common stock $300,000
Sales Revenue $545,000
Sales Discount $45,000
Net Sales $500,000
Cost of Goods Sold $400,000
Rent Expense $12,000
Salaries Expenses $25,000
Depreciation Expense $10,000
Interest Expense $6,000
Income Tax Expense $8,000
The Common Stock ending balance is $300,000 ($250,000 + $50,000).
Statement of Retained Earnings:
Retained Earnings $60,000
Net income $39,000
Dividend paid ($4,000)
Retained earnings, ending $95,000
Thus, the total stockholders' equity ending balance is $395,000 ($300,000 + $95,000).
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