Question 1 - Multiple-Step Income, Retained Earnings
Presented below is information related to Dickinson Company for 2012
Retained earnings balance, January 1, 2012 $ 980,000
Sales revenue 25,000,000
Cost of goods sold 16,000,000
Interest revenue 70,000
Selling and administrative expenses 4,700,000
Write-off of goodwill 820,000
Income taxes for 2012 1,244,000
Gain on the sale of investments (normal recurring) 110,000
Loss due to flood damage-extraordinary item (net of tax) 390,000
Loss on the disposition of the wholesale division (net of tax) 440,000
Loss on operations of the wholesale division (net of tax) 90,000
Dividends declared on common stock 250,000
Dividends declared on preferred stock 80,000
Instructions - Prepare a multiple-step income statement and a retained earnings statement. Dickinson Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, Dickinson sold the wholesale operations to Rogers Company. During 2012, there were 500,000 shares of common stock outstanding all year.
Question 2 - Balance Sheet Preparation
Presented below are a number of balance sheet items for Montoya, Inc., for the current year, 2012.
Goodwill $ 125,000 Accumulated depreciation-equipment $ 292,000
Payroll taxes payable 177,591 Inventory 239,800
Bonds payable 300,000 Rent payable (short-term) 45,000
Discount on bonds payable 15,000 Income tax payable 98,362
Cash 360,000 Rent payable (long-term) 480,000
Land 480,000 Common stock, $1 par value 200,000
Notes receivable 445,700 Preferred stock, $10 par value 150,000
Notes payable (to banks) 265,000 Prepaid expenses 87,920
Accounts payable 490,000 Equipment 1,470,000
Retained earnings ? Equity investments (trading) 121,000
Income taxes receivable 97,630 Accumulated depreciation-buildings 270,200
Unsecured notes payable (long-term) 1,600,000 Buildings 1,640,000
Instructions - Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of equity investments (trading) are the same.