Note: You must complete Comprehensive Problem 4 (Part A) before completing Comprehensive Problem 4 (Part B).

Required:

2. After all of the transactions for the year ended December 31, 20Y5, 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.

a. Prepare a multiple-step income statement for the year ended December 31, 20Y5, 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. Be sure to complete the statement heading. Refer to the account names in the instructions and the lists of Labels and Amount Descriptions for the exact wording of text entries. Less or Add will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. (Round earnings per share to the nearest cent.)

b. Prepare a retained earnings statement for the year ended December 31, 20Y5. Be sure to complete the statement heading. Refer to the account names in the instructions and the lists of Labels and Amount Descriptions for the exact wording of text entries. If a net loss is incurred or there is a decrease in owners equity, enter that amount as a negative number using a minus sign.

c. Prepare a balance sheet in report form as of December 31, 20Y5. Be sure to complete the statement heading. Refer to the account names in the instructions and the lists of Labels and Amount Descriptions for the exact wording of text entries. Less or Add will automatically appear if it is required. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Recall that current assets are to be reported in order of liquidity. Available-for-sale investments are considered to be more liquid than accounts receivable. Report fixed assets and paid-in capital accounts in account-number order. Omit the description of bonds and stocks (i.e., percentage rates, due date, number of shares, etc.).

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, 20Y5), 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, 20Y5 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)