Comprehensive Problem $4$

Part $2$: Note:$$You must complete part $1$ before part $2.$

After all of the transactions for the year ended December $31,20$Y$5,$ had been posted $[$including the transactions recorded in part $(1)$ and all adjusting entries$],$ the data that follows were taken from the records of Equinox Products Inc.

Income statement data:

Advertising expense

$$150,000$

Cost of merchandise sold

$3,700,000$

Delivery expense

$30,000$

Depreciation expense$$office buildings and equipment

$30,000$

Depreciation expense$$store buildings and equipment

$100,000$

Gain on sale of investments

$4,980$

Income from Pinkberry Co$.$ investment

$76,800$

Income tax expense

$142,000$

Interest expense

$21,000$

Interest revenue

$8,720$

Miscellaneous administrative expense

$7,500$

Miscellaneous selling expense

$14,000$

Office rent expense

$50,000$

Office salaries expense

$170,000$

Office supplies expense

$10,000$

Sales

$5,254,000$

Sales commissions expense

$185,000$

Sales salaries expense

$385,000$

Store supplies expense

$21,000$

Retained earnings and balance sheet data:

Accounts payable

$$194,300$

Accounts receivable

$545,000$

Accumulated depreciation$$office buildings and equipment

$1,580,000$

Accumulated depreciation$$store buildings and equipment

$4,126,000$

Allowance for doubtful accounts

$8,450$

Available$-$for$-$sale investments $($at cost$)$

$260,130$

Bonds payable, $5\%,$ due in $10$ years

$500,000$

Cash

$246,000$

Common stock, $$20$ par $(400,000$ shares authorized;

$100,000$ shares issued, $94,600$ outstanding$)$

$2,000,000$

Dividends:

$$Cash dividends for common stock

$155,120$

$$Cash dividends for preferred stock

$100,000$

Goodwill

$500,000$

Income tax payable

$44,000$

Interest receivable

$1,125$

Investment in Pinkberry Co$.$ stock $($equity method$)$

$1,009,300$

Investment in Dream Inc. bonds $($long term$)$

$90,000$

Merchandise inventory $($December $31,20$Y$5),$ at lower

$$of cost $($FIFO$)$ or market

$778,000$

Office buildings and equipment

$4,320,000$

Paid$-$in capital from sale of treasury stock

$13,000$

Excess of issue price over par$$common stock

$886,800$

Excess of issue price over par$$preferred stock

$150,000$

Preferred $$1$ stock, $$80$ par $(30,000$ shares authorized;

$20,000$ shares issued$)$

$1,600,000$

Premium on bonds payable

$19,000$

Prepaid expenses

$27,400$

Retained earnings, January $1,20$Y$5$

$9,319,725$

Store buildings and equipment

$12,560,000$

Treasury stock $(5,400$ shares of common stock at cost of

$$$$33$ per share$)$

$178,200$

Unrealized gain $($loss$)$ on available$-$for$-$sale investments

$(6,500)$

Valuation allowance for available$-$for$-$sale investments

$(6,500)$

On your own paper, in the working papers, or using a spreadsheet, prepare the following:

a$.$Prepare a multiple$-$step income statement for the year ended December $31,20$Y$5,$ concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was $100,000$ and preferred dividends were $$100,000.($Round earnings per share to the nearest cent.$)$Save your calculations and enter the requested amounts below.

b$.$Prepare a retained earnings statement for the year ended December $31,20$Y$5.$ Save your calculations and enter the requested amounts below.

c$.$Prepare a balance sheet in report form as of December $31,20$Y$5.$ Save your calculations and enter the requested amounts below.

If required, only use the minus sign to indicate loss before income tax, net loss, or a deficit balance in retained earnings.

$$

Gross profit

Total selling expenses

Total administrative expenses

Total operating expenses

Income from operations

Net other expenses and income

Income tax

Net income

Earnings per common share $($rounded to the nearest cent$)$

$fill in the blank $9$

Retained earnings, January $1,20$Y$5$

$fill in the blank $10$

Total current assets

$fill in the blank $11$

Investment in Dream Inc. bonds

$fill in the blank $12$

Total property, plant, and equipment

$fill in the blank $13$

Total assets

$fill in the blank $14$

Total current liabilities

$fill in the blank $15$

Net long$-$term liabilities

Total liabilities

Total paid$-$in capital preferred $$1$ stock

Total paid$-$in capital common stock, $$20$ par

Total paid$-$in capital

Retained earnings, December $31,20$Y$5$

Total stockholders' equity