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ACCOUNTS CASH ACCOUNTS RECEIVABLE ALLOWANCE FOR DOUBTFUL ACCOUNTS INVENTORY (at January 1, 2020) OFFICE BUILDING ACCUMULATED DEPRECIATION (OFFICE BUILDING) LAND ACCOUNTS PAYABLE PREFERRED STOCK COMMON STOCK, 100,000 number of shares outstanding ON DEC 31, 2020 RETAINED EARNINGS, at January 1, 2020 SALES REVENUE SALES DISCOUNTS SALES RETURNS AND ALLOWANCES PURCHASES PURCHASES DISCOUNTS TRANSPORTATION - IN BUDDY CORPORATION ADJUSTED TRIAL BALANCE DECEMBER 31, 2020 SALARIES EXPENSE RENT EXPENSE INSURANCE EXPENSE LOSS DUE TO FIRE GAIN ON SALE OF EQUIPMENT from Continuing Operations ADVERTISING EXPENSE DEPRECIATION EXPENSE GAIN ON SALE OF ASSETS from DISCONTINUED OPERATIONS OPERATING LOSS ON DISCONTINUED OPERATIONS CASH DIVIDENDS DECLARED -Preferred Dividends CASH DIVIDENDS DECLARED-Common Dividends TOTAL NOTE: All revenue, expense figures are before taxes DEBIT 24,868 425,905 412,812 600,000 70,600 10,571 51,359 2,600,824 25,235 211,599 40,955 16,456 25,673 18,860 28,580 12,225 29,732 20,000 4,626,254 CREDIT 3,450 280,000 298,757 100,000 113,866 289,423 3,491,148 34,778 6,232 8,600 4,626,254

ACCOUNTS CASH ACCOUNTS RECEIVABLE ALLOWANCE FOR DOUBTFUL ACCOUNTS INVENTORY (at January 1, 2020) OFFICE BUILDING ACCUMULATED DEPRECIATION (OFFICE BUILDING) LAND ACCOUNTS PAYABLE PREFERRED STOCK COMMON STOCK, 100,000 number of shares outstanding ON DEC 31, 2020 RETAINED EARNINGS, at January 1, 2020 SALES REVENUE SALES DISCOUNTS SALES RETURNS AND ALLOWANCES PURCHASES PURCHASES DISCOUNTS TRANSPORTATION - IN BUDDY CORPORATION ADJUSTED TRIAL BALANCE DECEMBER 31, 2020 SALARIES EXPENSE RENT EXPENSE INSURANCE EXPENSE LOSS DUE TO FIRE GAIN ON SALE OF EQUIPMENT from Continuing Operations ADVERTISING EXPENSE DEPRECIATION EXPENSE GAIN ON SALE OF ASSETS from DISCONTINUED OPERATIONS OPERATING LOSS ON DISCONTINUED OPERATIONS CASH DIVIDENDS DECLARED -Preferred Dividends CASH DIVIDENDS DECLARED-Common Dividends TOTAL NOTE: All revenue, expense figures are before taxes DEBIT 24,868 425,905 412,812 600,000 70,600 10,571 51,359 2,600,824 25,235 211,599 40,955 16,456 25,673 18,860 28,580 12,225 29,732 20,000 4,626,254 CREDIT 3,450 280,000 298,757 100,000 113,866 289,423 3,491,148 34,778 6,232 8,600 4,626,254

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Prepare a detailed multi-step income statement (including EPS presentation) for the year ended December 31, 2020. Show calculations for EPS (for continuing and discontinued sections). Show details of COST OF GOODS SOLD and OPERATING EXPENSES sections.

2. Prepare a Statement of Retained Earnings for the year ended December 31, 2020.

ACCOUNTS CASH ACCOUNTS RECEIVABLE ALLOWANCE FOR DOUBTFUL ACCOUNTS INVENTORY (at January 1, 2020) OFFICE BUILDING ACCUMULATED DEPRECIATION (OFFICE BUILDING) LAND ACCOUNTS PAYABLE PREFERRED STOCK COMMON STOCK, 100,000 number of shares outstanding ON DEC 31, 2020 RETAINED EARNINGS, at January 1, 2020 SALES REVENUE SALES DISCOUNTS SALES RETURNS AND ALLOWANCES BUDDY CORPORATION ADJUSTED TRIAL BALANCE DECEMBER 31, 2020 PURCHASES PURCHASES DISCOUNTS TRANSPORTATION - IN SALARIES EXPENSE RENT EXPENSE INSURANCE EXPENSE LOSS DUE TO FIRE GAIN ON SALE OF EQUIPMENT from Continuing Operations ADVERTISING EXPENSE DEPRECIATION EXPENSE GAIN ON SALE OF ASSETS from DISCONTINUED OPERATIONS OPERATING LOSS ON DISCONTINUED OPERATIONS CASH DIVIDENDS DECLARED -Preferred Dividends CASH DIVIDENDS DECLARED-Common Dividends TOTAL NOTE: All revenue, expense figures are before taxes DEBIT 24,868 425,905 412,812 600,000 70,600 10,571 51,359 2,600,824 25,235 211,599 40,955 16,456 25,673 18,860 28,580 12,225 29,732 20,000 4,626,254 CREDIT 3,450 280,000 298,757 100,000 113,866 289,423 3,491,148 34,778 6,232 8,600 4,626,254
Transcribed Image Text:ACCOUNTS CASH ACCOUNTS RECEIVABLE ALLOWANCE FOR DOUBTFUL ACCOUNTS INVENTORY (at January 1, 2020) OFFICE BUILDING ACCUMULATED DEPRECIATION (OFFICE BUILDING) LAND ACCOUNTS PAYABLE PREFERRED STOCK COMMON STOCK, 100,000 number of shares outstanding ON DEC 31, 2020 RETAINED EARNINGS, at January 1, 2020 SALES REVENUE SALES DISCOUNTS SALES RETURNS AND ALLOWANCES BUDDY CORPORATION ADJUSTED TRIAL BALANCE DECEMBER 31, 2020 PURCHASES PURCHASES DISCOUNTS TRANSPORTATION - IN SALARIES EXPENSE RENT EXPENSE INSURANCE EXPENSE LOSS DUE TO FIRE GAIN ON SALE OF EQUIPMENT from Continuing Operations ADVERTISING EXPENSE DEPRECIATION EXPENSE GAIN ON SALE OF ASSETS from DISCONTINUED OPERATIONS OPERATING LOSS ON DISCONTINUED OPERATIONS CASH DIVIDENDS DECLARED -Preferred Dividends CASH DIVIDENDS DECLARED-Common Dividends TOTAL NOTE: All revenue, expense figures are before taxes DEBIT 24,868 425,905 412,812 600,000 70,600 10,571 51,359 2,600,824 25,235 211,599 40,955 16,456 25,673 18,860 28,580 12,225 29,732 20,000 4,626,254 CREDIT 3,450 280,000 298,757 100,000 113,866 289,423 3,491,148 34,778 6,232 8,600 4,626,254
ADDITIONAL INFORMATION: 1. The company performed a year end physical count of its inventory as at December 31, 2020. The amount of inventory on hand at December 31, 2020 amounted to $415,700. Inventory is maintained on a PERIODIC basis. 2. Assume that the tax rate was 30%. All accounts on the Trial Balance are before tax. 3. The amount of common stock outstanding on January 1, 2020 was 50,000 In 2020, common stock was issued as follows: on April 1: 20,000 common shares were issued and on September 1: 30,000 common shares were issued. 4. An error was discovered in the company's 2019 financial statements. Depreciation Expense in 2019 was understated by $35,000.
Transcribed Image Text:ADDITIONAL INFORMATION: 1. The company performed a year end physical count of its inventory as at December 31, 2020. The amount of inventory on hand at December 31, 2020 amounted to $415,700. Inventory is maintained on a PERIODIC basis. 2. Assume that the tax rate was 30%. All accounts on the Trial Balance are before tax. 3. The amount of common stock outstanding on January 1, 2020 was 50,000 In 2020, common stock was issued as follows: on April 1: 20,000 common shares were issued and on September 1: 30,000 common shares were issued. 4. An error was discovered in the company's 2019 financial statements. Depreciation Expense in 2019 was understated by $35,000.
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