Financial Statement Project Browning Company has the following ledger accounts a
ID: 2396127 • Letter: F
Question
Financial Statement Project
Browning Company has the following ledger accounts and adjusted balances as of December 31, 2017. All accounts have normal balances. Browning’s income tax rate is 40%. Browning has 300,000 shares of Common Stock authorized and 100,000 shares of Common Stock issued and outstanding.
Accounts Payable……………………………. 26,000
Accounts Receivable………………………… 180,000
Accumulated Depreciation-Building………… 50,000
Administrative Expenses……………………. 40,000
Allowance for Doubtful Accounts…………… 20,000
Mortgage Payable …………..………………. 250,000*
Building……………………………………… 500,000
Cash…………………………………………. 26,000
Common Stock……………………………… 300,000
Cost of Goods Sold…………………………. 380,000
Dividends…………………………………… 20,000
Income from Operations of Division X…….. 40,000
(Division X is a component of Browning Company)
Interest Revenue…………………………….. 20,000
Inventory……………………………………...280,000
Land (held for future use)...…………………. 200,000
Loss from Sale of Division X........................... 80,000
(Division X is a component of Browning Company)
Loss on Sale of Investments.……………….. .. 10,000
Paid-In Capital in Excess of Par……………...116,000
Patent………………………………………… 30,000
Prepaid Insurance……………………………. 10,000**
Retained Earnings, January 1, 2017………… 250,000
Sales Discounts………………………………. 20,000
Sales Revenue………………………………..990,000
Selling Expenses……………………………. 130,000
*$25,000 of the principal comes due in 2018.
**Two years insurance paid in advance.
Instructions:
Use this information to prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.
Explanation / Answer
1 Browing Company Income Statement For the month ended December 31, 2017 Revenue Sales 990,000 Less: Sales Discount 20,000 970,000 Less: Cost of goods sold 380,000 Gross Profit 590,000 Expenses Administrative expenses 40,000 Selling Expenses 130,000 170,000 Operating income 420,000 Other income and expenses Interest Income 20,000 Loss on Sale of Investments (10,000) 10,000 Income before income taxes and extraordinary items 430,000 Income from Operations of Division X 40,000 Loss from Sale of Division X (80,000) (40,000) Income before income taxes 390,000 Less: Income Tax 156,000 Net Income 234,000 2 Browing Company Statement of Retained Earnings For the month ended December 31, 2017 Retained Earnings, Jan 1 250,000 Add: Net Income / (loss) 234,000 484,000 Less: Dividend 20,000 Retained Earnings, Dec 31 464,000 3 Browing Company Balance Sheet December 31, 2017 Assets Current Assets Cash 26,000 Accounts Receivable 180,000 Less: Allowance for Doubtful Accounts (20,000) Inventory 280,000 Prepaid Insurance 10,000 Total 476,000 Non-Current Assets Land (held for future use) 200,000 Building 500,000 Less: Accumulated Depreciation - Building (50,000) Patent 30,000 Total 680,000 Total assets 1,156,000 Liabilities and Stockholders' Equity Current Liabilities Accounts Payable 26,000 Mortgage Payable (due in 2018) 25,000 Total 51,000 Non-Current Liabilities Mortgage Payable 225,000 Total 225,000 Total Liabilities 276,000 Stockholders' Equity Capital Stock 300,000 Retained Earnings 464,000 Paid-In Capital in Excess of Par 116,000 Total Stockholders' Equity 880,000 Total Liabilities and Stockholders' Equity 1,156,000
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