File Home Insert Page Layout Formulas Data Review View Help 04 D E P507,000 A B 1 Lan Services Incorporated 2 Income Statement 3 For the Year Ended December 31, 2020 4 Sales revenue 5 Cost of Goods Sold 150,000 6 Operating expenses (excluding depreciation) 111,000 7 Depreciation expense 9,000 8 Loss on disposal fo plant assets 3,000 9 Interest expense 42.000 10 Income before income taxes 11 Income tax expense 12 Net income 13 Figure 1. Income Statement 315.000 192,000 47,000 145,000 Additional information: 1. Depreciation expense was comprised of P6,000 for building and P3,000 for equipment. 2. The company sold equipment with a book value of P7,000 (cost P8,000, less accumulated depreciation fo P1,000) for cash. 3. The company issued P110,000 of long-term bonds in direct exchange for land. 4. A building costing P120,000 was purchased for cash. Equipment costing P25,000 was also purchased for cash. 5. The company declared P29,000 cash dividend. File Home Insert Page Layout Formulas Data Review View Help 03 F G H 1 ? B D E Lan Services Incorporated Comparative Statement of Financial Position December 31, 2020 Change in Account Balance Increase/Decrease 1 2020 2019 7 55,000 20,000 15,000 5,000 33,000 30,000 10,000 1,000 22,000 Increase 10,000 Decrease 5,000 Increase 4,000 Increase Assets Current assets 5 Cash Accounts receivable 3 Inventory Prepaid expenses o Property, plant, and equipment 1 Land 2 Buildings 3 Accumulated depreciation - buildings 4 Equipment 5 Accumulated depreciation - equipment 6 Total assets 7 8 Liabilities and Stockholders' Equity 9 Current liabilities 0 Accounts payable 1 Income taxes payable 2 Long-term liabilities 3 Bonds payable 4 Stockholders' equity 5 Common stock 6 Retained earnings 7 Total liabilities and stockholders equity 130,000 160,000 (11,000) 27,000 (3,000) 398,000 20,000 40,000 (5,000) 10,000 (1,000) 138,000 110,000 Increase 120,000 Increase 6,000 Increase 17,000 Increase 2,000 Increase 28,000 6,000 12,000 8,000 16,000 Increase 2,000 Decrease 130,000 20,000 110,000 Increase 70,000 164,000 398,000 50,000 48,000 138,000 20,000 Increase 116,000 Increase 7 Determine the reconciling items by preparing entries for each account: a. Accounts receivable b. Inventory C. Prepaid expenses d. Land e. Buildings f. Purchase of equipment g. Sale of equipment h. Accounts payable i. Income taxes payable j. Common stock k. Depreciation expense for buildings I. Depreciation expense for equipment m. Increase in retained earnings due to net income n. Payment of dividends o. Increase in cash Debit Credit a. b. Operating - Decrease in Accounts Receivable Accounts Payable Inventory Operating - Increase in Inventory Prepaid Expenses Operating - Increase in Prepaid Expenses Figure 3. Reconciling Items C