Lurch Companys December 31, 2015, balance sheet follows: During 2016, the following transactions occurred: 1. To avoid

Question:

Lurch Company€™s December 31, 2015, follows:

Lurch Company€™s December 31, 2015, balance sheet follows:During 2016, the

During 2016, the following transactions occurred:
1. To avoid paying monthly rent of $ 5,000 on existing plant facilities, the company decided to buy a tract of land and construct a building of its own on it. On January 2, 2016, Lurch exchanged 6,000 shares of its common stock to acquire the land; the stock was selling for $ 25 per share. Construction of the building also began on January 2, 2016. At the time, Lurch borrowed funds by issuing a 1- year, $ 500,000 note at 12% to help finance the project. The principal and interest on the note are due January 3, 2017. Construction costs (paid in cash) that occurred evenly throughout the year totaled $ 700,000. The building was completed on December 30, 2016, and the move- in to the new building was to occur during the next week.
2. On January 2, 2016, Lurch exchanged its one existing machine plus $ 50,000 for a newer machine with a fair value of $ 430,000. The new machine is to be depreciated using straight- line depreciation based on an economic life of 5 years and a residual value of $ 55,000.
3. Lurch uses a FIFO perpetual inventory system. Lurch sold $ 350,000 of its inventory for $ 700,000 cash, paid for its beginning accounts payable, and purchased $ 480,000 of inventory on account during the year.
4. On July 31, 2016, Lurch declared and paid a $ 2.50 per share cash dividend to its shareholders.
5. Lurch is subject to a 30% income tax rate, and income taxes are accrued at year- end.
Required:
Prepare Lurch€™s income statement and statement of retained earnings for the fiscal year ended December 31, 2016, and a balance sheet as of December 31, 2016. Show all supporting journal entries and computations made during 2016.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...