Below is a trial balance for ABC Corporation for the year ended December 31, 20x1. Certain items have been omitted to make the problem more interesting.
Required: on a separate tab labelled "Answer" prepare an income statement for the year 20x1 and a balance sheet as of December 31, 20x1. Both statements should be properly formatted and classified as illustrated in class and readings. The grader should be able to follow your calculations in order for you to receive credit.
Operating income is $312,000. Income tax expense is 40% of income before taxes.
Gross margin is 30% and current ratio is 4:1. The allowance is 5% of the gross accounts receivable.
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Dr
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Cr
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Accounts payable
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120,000
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Accounts receivable
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?
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Accumulated depreciation
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110,000
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Allowance for bad debts
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?
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Cash
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40,000
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Common stock
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50,000
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Cost of goods sold
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?
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Depreciation expense
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21,000
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Dividends paid
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20,000
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Equipment
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350,000
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Income tax expense
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?
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Interest expense
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12,000
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Inventory
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276,000
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Investments
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20,000
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Notes payable
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200,000
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Other operating expense
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20,000
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Prepaid rent
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12,000
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Rent expense
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?
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Retained earnings (Jan 1, 20x1)
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210,000
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Salaries expense
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482,000
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Sales
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3,000,000
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Utilities expense
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17,000
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