Declan's Designs Balance Sheet Declan's Designs Income Statement ASSETS Current Assets For the Year Ending 12/31/2022 12/31/2021 12/31/2022 Cash and Cash Equivalents Accounts Receivable, Net Merchandise Inventory Total Current Assets $90,000 97,000 400,000 587,000 $294,000 101,000 475,000 870,000 Sales Revenue $225,000 (16,000) 209,000 CGS Gross Margin SG&A Operating Income Interest Expense Loss on Sale of PPE (22,000) 187,000 (12,000) (5,000) 170,000 (7,000) $163,000 PPE, Net Goodwill, Net 62,000 600,000 $1,249,000 70,000 600,000 $1,540,000 Total Assets Pre-Tax Income LIABILITIES & SHAREHOLDERS' EQUITY Income Tax Expense Net Income Current Liabilities Accounts Payable Interest Payable Dividends Payable 26,000 3,000 20,000 49,000 17,000 5,000 10,000 32,000 Additional Information regarding Declan's Designs' 12/31/22 financials: Total Current Liabilities Mortgage Payable Long-Term Bank Loan Total Liabilities PROPERTY, PLANT & EQUIPMENT PPE is shown net accumulated depreciation. Accumulated depreciation was $18,000 at the beginning of the year and $20,000 at the end of the year. Depreciation expense for the year was $3,000, which is included in SG&A. New PPE was bought during the year for $22,000 (in cash). 500,000 500,000 200,000 732,000 549,000 Shareholder's Equity Preferred Stock Note: You may use the worksheet provided on the last page to help you prepare the Cash Flow Statement. 10,000 60,000 738,000 808,000 Common Stock Hint #1: The most recent year is not always in the left column. Additional Paid in Capital Retained Earnings Total Sharcholder's Equity 8,000 54,000 638,000 Hint #2: Evaluate changes in gross PPE separate from changes in accumulated depreciation. Recall gross PPE less accumulated depreciation equals net PPE. 700,000 Hint #3: Never "plug" the annual change in gross PPE. Separately evaluate the increase in gross PPE (capital expenditures) from the annual decrease in gross PPE (sale of PPE). Total Liabilities &Sharcholders' Equity $1,249,000 $1,540,000 Hint #4: The total change in cash due to stock issuances/repurchases is the sum of the change in common stock (stated par value) and additional paid in capital (APIC). Hint #5: Dividends declared (the decrease in RE) is not the same as dividends paid (the decrease in dividends payable). To find dividends paid, set up your dividends payable account with the beginning and ending balances from the balance sheet. Increase dividends paid by the amount of dividends declared. Then plug for the decrease in dividends payable (which represents dividends paid).

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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What is the journal entry Declan's Designs recorded to recognize the declaration of dividends in 2022?

Declan's Designs Balance Sheet
Declan's Designs Income Statement
ASSETS
12/31/2021
12/31/2022
For the Year Ending
Current Assets
12/31/2022
Cash and Cash Equivalents
Accounts Receivable, Net
Merchandise Inventory
Total Current Assets
$90,000
97,000
400,000
587,000
$294,000
101,000
475,000
870,000
Sales Revenue
$225,000
(16,000)
209,000
(22,000)
187,000
(12,000)
(5,000)
170,000
(7,000)
$163,000
CGS
Gross Margin
SG&A
PPE, Net
Goodwill, Net
62,000
600,000
$1,249,000
70,000
600,000
$1,540,000
Operating Income
Interest Expense
Total Assets
Loss on Sale of PPE
Pre-Tax Income
Income Tax Expense
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable
Interest Payable
Dividends Payable
Net Income
26,000
3,000
20,000
49,000
17,000
5,000
10,000
32,000
Additional Information regarding Declan's Designs' 12/31/22 financials:
Total Current Liabilities
Mortgage Payable
Long-Term Bank Loan
Total Liabilities
PROPERTY, PLANT & EQUIPMENT
PPE is shown net accumulated depreciation. Accumulated depreciation was $18,000 at the beginning of
the year and $20,000 at the end of the year. Depreciation expense for the year was $3,000, which is
included in SG&A. New PPE was bought during the year for $22,000 (in cash).
500,000
500,000
200,000
732,000
549,000
Shareholder's Equity
Note: You may use the worksheet provided on the last page to help you prepare the Cash Flow Statement.
Preferred Stock
Common Stock
Hint #1: The most recent year is not always in the left column.
Additional Paid in Capital
Retained Earnings
Total Shareholder’s Equity
8,000
54,000
638,000
700,000
10,000
60,000
738,000
808,000
Hint #2: Evaluate changes in gross PPE separate from changes in accumulated depreciation. Recall gross
PPE less accumulated depreciation equals net PPE.
Hint #3: Never “plug" the annual change in gross PPE. Separately evaluate the increase in gross PPE
(capital expenditures) from the annual decrease in gross PPE (sale of PPE).
Total Liabilities &Shareholders’ Equity
$1,249,000
$1,540,000
Hint #4: The total change in cash due to stock issuances/repurchases is the sum of the change in common
stock (stated par value) and additional paid in capital (APIC).
Hint #5: Dividends declared (the decrease in RE) is not the same as dividends paid (the decrease in
dividends payable). To find dividends paid, set up your dividends payable account with the beginning and
ending balances from the balance sheet. Increase dividends paid by the amount of dividends declared.
Then plug for the decrease in dividends payable (which represents dividends paid).
Transcribed Image Text:Declan's Designs Balance Sheet Declan's Designs Income Statement ASSETS 12/31/2021 12/31/2022 For the Year Ending Current Assets 12/31/2022 Cash and Cash Equivalents Accounts Receivable, Net Merchandise Inventory Total Current Assets $90,000 97,000 400,000 587,000 $294,000 101,000 475,000 870,000 Sales Revenue $225,000 (16,000) 209,000 (22,000) 187,000 (12,000) (5,000) 170,000 (7,000) $163,000 CGS Gross Margin SG&A PPE, Net Goodwill, Net 62,000 600,000 $1,249,000 70,000 600,000 $1,540,000 Operating Income Interest Expense Total Assets Loss on Sale of PPE Pre-Tax Income Income Tax Expense LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable Interest Payable Dividends Payable Net Income 26,000 3,000 20,000 49,000 17,000 5,000 10,000 32,000 Additional Information regarding Declan's Designs' 12/31/22 financials: Total Current Liabilities Mortgage Payable Long-Term Bank Loan Total Liabilities PROPERTY, PLANT & EQUIPMENT PPE is shown net accumulated depreciation. Accumulated depreciation was $18,000 at the beginning of the year and $20,000 at the end of the year. Depreciation expense for the year was $3,000, which is included in SG&A. New PPE was bought during the year for $22,000 (in cash). 500,000 500,000 200,000 732,000 549,000 Shareholder's Equity Note: You may use the worksheet provided on the last page to help you prepare the Cash Flow Statement. Preferred Stock Common Stock Hint #1: The most recent year is not always in the left column. Additional Paid in Capital Retained Earnings Total Shareholder’s Equity 8,000 54,000 638,000 700,000 10,000 60,000 738,000 808,000 Hint #2: Evaluate changes in gross PPE separate from changes in accumulated depreciation. Recall gross PPE less accumulated depreciation equals net PPE. Hint #3: Never “plug" the annual change in gross PPE. Separately evaluate the increase in gross PPE (capital expenditures) from the annual decrease in gross PPE (sale of PPE). Total Liabilities &Shareholders’ Equity $1,249,000 $1,540,000 Hint #4: The total change in cash due to stock issuances/repurchases is the sum of the change in common stock (stated par value) and additional paid in capital (APIC). Hint #5: Dividends declared (the decrease in RE) is not the same as dividends paid (the decrease in dividends payable). To find dividends paid, set up your dividends payable account with the beginning and ending balances from the balance sheet. Increase dividends paid by the amount of dividends declared. Then plug for the decrease in dividends payable (which represents dividends paid).
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