Question :

McMinn Retail, Inc. is a retailer that has engaged you to help in the preparation of its financial statements at 31^st December, 2011. Following are the accurate adjusted account balances, in alphabetical order, as of that date. All balance is the "normal" balance for that account. (hint: The normal balance is the similar as the debit or credit side that increases the account.)

Accounts payable..................................................................... $12,750

Accounts receivable.....................................................................2,600

Accumulated Depreciation: office equipment...........................12,000

Additional paid-in capital (common stock)................................7,000

Bonds payable (due December 31, 2014)................................... 22,500

Cash........................................................................................ ..15,200

Common Stock (1,800 shares, $10 par value............................. 18,000

Cost of Goods Sold..................................................................... ..100,575

Deferred income taxes................................................................ ..5,750

Depreciation expense: Office Equipment.....................................2,750

Dividends declared....................................................................... 5,000

Income tax expense.................................................................... 8,190

Insurance expense....................................................................... 900

Land.......................................................................................... 37,500

Merchandise Inventory.................................................................17,500

Notes Payable (Due December 31, 2012).....................................2,500

Office Equipment.........................................................................41,000

Office Supplies........................................................................... 900

Office Supplies Expense............................................................. 520

Preferred Stock (250 shares, $20 par value)................................5,000

Premium on bonds payable..........................................................1,750

Prepaid Rent................................................................................1,800

Rent Expense...............................................................................6,100

Retained Earnings (January 2011)............................................21,050

Salaries Expense...........................................................................88,095

Sales.......................................................................................... 226,000

Sales Returns and allowances.......................................................2,500

Sales taxes payable..................................................................... .3,200

Treasury stock (200 common shares at cost)............................. 2,250

Utilities Expense......................................................................... ..4,120

Instructions:

a. Purpose an income statement for the year ended 31^st December, 2011, which adds amounts for gross profit, income before income taxes, and total income. List expenses (other than income tax expense and cost of goods sold) in order, from the largest to the smallest dollar balance. You will ignore earnings per share.

b. Purpose a statement of retained earnings for the year ending 31^st December, 2011.

c. Purpose a statement of financial position (balance sheet) as of 31^st December, 2011.