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Comprehensive Problem 4

Part 2:

Note: You must complete part 1 before part 2.

After all of the transactions for the year ended December 31, 20Y8, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data below were taken from the records of Equinox Products Inc.

Income statement data:
Advertising expense		$150,000
Cost of goods sold		3,700,000
Delivery expense		30,000
Depreciation expenseoffice buildings and equipment		30,000
Depreciation expensestore buildings and equipment		100,000
Income tax expense		140,500
Interest expense		21,000
Interest revenue		30,000
Miscellaneous administrative expense		7,500
Miscellaneous selling expense		14,000
Office rent expense		50,000
Office salaries expense		170,000
Office supplies expense		10,000
Sales		5,313,000
Sales commissions		185,000
Sales salaries expense		385,000
Store supplies expense		21,000
Retained earnings and balance sheet data:
Accounts payable		$194,300
Accounts receivable		545,000
Accumulated depreciationoffice buildings and equipment		1,580,000
Accumulated depreciationstore buildings and equipment		4,126,000
Allowance for doubtful accounts		8,450
Bonds payable, 5%, due in 10 years		500,000
Cash		282,850
Common stock, $20 par (400,000 shares authorized; 100,000 shares issued, 94,600 outstanding)		2,000,000
Dividends:
Cash dividends for common stock		155,120
Cash dividends for preferred stock		100,000
Goodwill		700,000
Income tax payable		44,000
Interest receivable		1,200
Inventory (December 31, 20Y8), at lower of cost (FIFO) or market		778,000
Office buildings and equipment		4,320,000
Paid-in capital from sale of treasury stock		13,000
Excess of issue price over parcommon stock		886,800
Excess of issue price over parpreferred stock		150,000
Preferred 5% stock, $80 par (30,000 shares authorized; 20,000 shares issued)		1,600,000
Premium on bonds payable		19,000
Prepaid expenses		27,400
Retained earnings, January 1, 20Y8		8,197,220
Store buildings and equipment		12,560,000
Treasury stock (5,400 shares of common stock at cost of $33 per share)		178,200

1. Prepare an income statement. Deductions in the Other Revenue and Expense section should be entered as negative amounts.

Equinox Products Inc. Income Statement For the Year Ended December 31, 20Y8
Sales
Expenses:
Selling expenses:
Total selling expenses
Administrative expenses:
Total administrative expenses
Total operating expenses
Income from operations
Other revenue and expense:
Total other revenue and expense
Income before income tax
Income tax
Net income

2. Prepare a retained earnings statement. Decreases in equity should be entered as negative amounts by using a minus sign.

Equinox Products Inc. Retained Earnings Statement For the Year Ended December 31, 20Y8

3. Prepare a balance sheet. Accounts that cause decreases in assets should be entered as negative amounts by using a minus sign.

Equinox Products Inc. Balance Sheet December 31, 20Y8
Assets
Current assets:
Total current assets
Property, plant and equipment:
Total property, plant and equipment
Intangible assets:
Total assets
Liabilities
Current liabilities:
Total current liabilities
Total liabilities
Stockholders Equity
Paid-in capital:
Total paid-in capital
Total stockholders equity
Total liabilities and Stockholders Equity

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