Problem 1: Charlotte Company's adjusted trial balance on December 31, 2013, follows.
Debit Credit
Cash $20,000
Accounts Receivable 35,000
Prepaid expenses 10,000
Supplies 8,000
Merchandise inventory . . . . . . . . . . . 43,000
Equipment . . . . . . . 184,000
Patent 20,000
Accumulated Depreciation - Equip 70,000
Accounts payable 20,000
Salaries payable 8,000
Taxes payable 4,000
Interest payable 1,000
Note Payable (long term) . . . . . . . . . . . . . . 75,000
Common stock . . . . . . . . . . . . . . . . 100,000
Retained earnings 20,000
Dividends paid . . . . . . . . . . . . 8,000
Sales . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Sales discounts . . . . . . . . . . . . . . . . . 4,000
Sales returns and allowances . . . . . . . 10,000
Cost of goods sold . . . . . . . . . . . . . . 120,000
Sales salaries expense . . . . . . . . . . . . 45,000
Rent expense- Selling space . . . . . . . 15,000
Store supplies expense . . . . . . . . . . . . 3,000
Advertising expense . . . . . . . . . . . . . . 25,000
Office salaries expense . . . . . . . . . . . . 40,000
Rent expense- Office space . . . . . . . 6,000
Office supplies expense . . . . . . . . . . . 2,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . $ 598,000 $ 598,000
Required:
Part 1: Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses. Check figure: Net income should be $30,000.
Part 2. Prepare a statement of retained earnings for the same year ended Dec 31, 2013. Retained earnings at the beginning of the year was $20,000. Check figure: Ending retained earnings as of Dec 31, 2013 should be $42,000.
Part 3. Prepare a classified balance sheet as of December 31, 2013 for the same company. Check figures: Total current assets should be $116,000 and total assets should be $250,000.