Answer:
Sherman Equipment Co.
a) Sherman Equipment Co.
Multistep Income Statement
For the year ended December 31, 2016
Sales Revenue $320,000
Cost of Goods Sold 148,000
Gross profit $172,000
Operating expenses:
Salaries Expense $ 69,000
Operating Expenses 62,000
Uncollectible Accounts Expense 8,100
Total operating expenses $139,100
Operating income $32,900
Interest Revenue 5,400
Net income $38,300
Balance Sheet
As of December 31, 2016
Assets
Current Assets:
Cash $48,100
Interest Receivable (short term) 1,500
Accounts Receivable 56,000
Allowance for Doubtful Accounts (7,800) 48,200
Notes Receivable (short term) 24,000
Supplies 1,200
Inventory 98,300
Prepaid Rent 12,500
Total current assets $233,800
Long-term assets:
Land 40,000
Total assets $273,800
Liabilities and Equity:
Current liabilities:
Accounts Payable $46,000
Salaries Payable 12,000
Total current liabilities $58,000
Equity:
Common Stock $100,000
Ending Retained Earnings 115,800
Total equity $215,800
Total liabilities and equity $273,800
Explanation:
a) Data and Calculations:
Cash 48,100
Interest Receivable (short term) 1,500
Accounts Receivable 56,000
Notes Receivable (short term) 24,000
Supplies 1,200
Inventory 98,300
Prepaid Rent 12,500
Land 40,000
Allowance for Doubtful Accounts 7,800
Accounts Payable 46,000
Salaries Payable 12,000
Common Stock 100,000
Beginning Retained Earnings 81,000
Dividends 3,500
Interest Revenue 5,400
Sales Revenue 320,000
Cost of Goods Sold 148,000
Salaries Expense $ 69,000
Operating Expenses $ 62,000
Uncollectible Accounts Expense 8,100
Cash Flow from Investing Activities 78,400
Beginning Retained Earnings 81,000
Net income 38,300
Dividends (3,500)
Ending Retained Earnings 115,800
