Problem - Preparation of Financial Statements
Braun Company has the following ledger accounts and adjusted balances as of December 31, 2014. All accounts have normal balances. Braun's income tax rate is 40%.
Accounts Payable.................................. 25,000
Accounts Receivable..............................160,000
Accumulated Depreciation-Building............ 50,000
Administrative Expenses......................... 50,000
Bonds Payable (Mature 2020)...................250,000
Building.............................................400,000
Cash................................................. 25,000
Common Stock....................................400,000
Cost of Goods Sold...............................400,000
Dividends.......................................... 20,000
Interest Revenue................................... 20,000
Inventory............................................280,000
Land.................................................200,000
Loss from Earthquake............................. 70,000
(unusual in nature and infrequent in occurrence)
Loss from Sale of Division X........................... 40,000
(Division X is a component of Braun Company)
Loss on Sale of Land............................. ..10,000
Patent................................................ 30,000
Prepaid Rent........................................ 10,000*
Retained Earnings, January 1, 2014............250,000
Sales Revenue.....................................900,000
Selling Expenses..................................100,000
*Two years rent paid in advance for offsite document storage.
Instructions: Use this information to prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.