The following financial statements were drawn from the records of Vernon Shoes: Balance Sheets As of December 31 Assets Cash Accounts receivable Merchandise inventory Notes receivable Equipment Accumulated depreciation- equipment Land Total assets Liabilities Accounts payable Salaries payable Utilities payable Interest payable Notes payable (long-term) Common stock Retained earnings Income Statement For the Year Ended December Sales revenue Cost of goods sold Gross margin Year 2 Operating expenses Salaries expense Depreciation expense Utilities expense Operating income Nonoperating items Interest expense $128,740 57,846 $ 27,060 66,980 113,260 29,700 257,800 (81,469) (143,060) 78,500 50,000 $460,899 $ 401,740 125, 182 0 152, 100 $ 41,335 33, 113 663 0 0 64,000 307,400 242,600 78,388 17,085 Total liabilities and equity $460,899 $ 401,740 31, Year 2 Loss on the sale of equipment Net income $ $ 582,470 (289, 225) 293, 245 Year 1 (181,270) (18,469) (12,920) 80,586 (3,129) (2,180) $ 75,277 47,830 26,490 1,325 2,410 Additional Information 1. Sold equipment costing $105,700 with accumulated depreciation of $80,060 for $23,460 cash. 2. Paid a $13,974 cash dividend to owners.

The following financial statements were drawn from the records of Vernon Shoes: Balance Sheets As of December 31 Assets Cash Accounts receivable Merchandise inventory Notes receivable Equipment Accumulated depreciation- equipment Land Total assets Liabilities Accounts payable Salaries payable Utilities payable Interest payable Notes payable (long-term) Common stock Retained earnings Income Statement For the Year Ended December Sales revenue Cost of goods sold Gross margin Year 2 Operating expenses Salaries expense Depreciation expense Utilities expense Operating income Nonoperating items Interest expense $128,740 57,846 $ 27,060 66,980 113,260 29,700 257,800 (81,469) (143,060) 78,500 50,000 $460,899 $ 401,740 125, 182 0 152, 100 $ 41,335 33, 113 663 0 0 64,000 307,400 242,600 78,388 17,085 Total liabilities and equity $460,899 $ 401,740 31, Year 2 Loss on the sale of equipment Net income $ $ 582,470 (289, 225) 293, 245 Year 1 (181,270) (18,469) (12,920) 80,586 (3,129) (2,180) $ 75,277 47,830 26,490 1,325 2,410 Additional Information 1. Sold equipment costing $105,700 with accumulated depreciation of $80,060 for $23,460 cash. 2. Paid a $13,974 cash dividend to owners.

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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