Create a Multistep Income Statement and Classified balance sheet.?

Question

Use the following to create a multistep Income statement and classified balance sheet for Douglas Comapany for year ending December 31, 2004. (Hint not everything will appear on either statment, and ending retained earning must be calculated.

Operating Exp. $90000
Land 50000
Accumulated Depreciation 38000
Accounts pay. 60000
unearned rev. 58000
warrenties pay. (short term) 2000
equipment 77000
notes pay. (long term) 129000
salvage value of eqipment 7000
dividends 12000
warranty exp. 5000
beginning retained earnings 28800
interest rev. 6000
gain on sale of equip. 10000
inventory 154000
notes rec.(short term) 17000
cash 23000
interest rec.(short term) 800
cash flow from investing activities 102000
allowance for doubt acc. 7000
interest pay (short) 3000
sales rev. 500000
uncollectible acc exp. 14000
interest exp. 32000
acc. rec. 113000
salaries pay. 12000
supply 3000
prepaid rent 14000
common stock 52000
cost of golds sold 179000
salary exp. 122000

Answer 1

Income Statement
Sales rev. 500,000
Less: COGS 179,000
Gross profit 321,000
Expenses:
salary exp. 122,000
Operating Exp. $90,000
warranty exp. 5,000
uncollectible acc exp. 14,000
interest exp. 32,000
Operating profit 58,000
Other income:
Interest rev. 6,000
Gain on sale of equip. 10,000
Net income 74,000

Retained Earnings:
Opening bal. 28,800
Net income 74,000
Dividends (12,000)
Closing bal. 90,800

Balance Sheet
Non-current Assets
Land 50,000
equipment 77,000
Accumulated Depreciation (38,000)
Sub-total 89,000
Current Assets
inventory 154,000
notes rec.(short term) 17,000
acc. rec. 113,000
less: allowance for doubt acc. (7,000)
prepaid rent 14,000
supply 3,000
interest rec.(short term) 800
cash 23,000
Sub-total 317,800

Total Assets 406,800

Non-Current Liabilities
notes pay. (long term) 129,000
Current Liabilities
Accounts pay. 60,000
unearned rev. 58,000
warranties pay. (short term) 2,000
interest pay (short) 3,000
salaries pay. 12,000
Sub-total 135,000

Total Liabilities 264,000

Equity
common stock 52,000
Retained earnings 90,800
Total equity 142,800

Total Liabilities & Equity 406,800

Useless information:
salvage value of eqipment 7000
cash flow from investing activities 102000

Whew! I need a drink after this...LOL

Answer 2

Multi Step Balance Sheet

Answer 3

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Yes you have to use everything on the trial balance. Everything on the TB will have a place either on the Income statement or the balance sheet. e.g. Vehicle repairs is an expense on the IS. Vehicle purchase is an asset on the BS.

Answer 4

No, the SEC requires full disclosure on public companies so their statements will always be somewhat complex.

Answer 5

This is a very valuable homework problem. You have to recognize which accounts are assets, liabilities, capital, revenues, and expenses.