• There are three exercises in Project 3: Project 3.1 Balance Sheet & Income Statement Part I, Project 3.2 Balance Sheet & Income Statement Part II, and Project 3.3. Balance Sheet & Income Statement Part III.
• Please read the following instructions and review the table carefully. Then, enter answers for journal items ([A] to [K] for Project 3.1, [A] to [K] for Project 3.2 and [A] to [Z], parts [i] and [ii] for Project 3.3) in the next three items in this Lesson, called Project 3: Project 3.1 Balance Sheet & Income Statement Part I, Project 3.2 Balance Sheet & Income Statement Part II, and Project 3.3. Balance Sheet & Income Statement Part III.
• If it's a negative number, please enter a negative number (i.e. a minus sign).
• For specific layouts of the balance sheet and income statement, please refer to the PDF file below.

The Balance Sheet of the Illini as of 12/31/20X0:

Illini Company, Inc.
Balance Sheet
as of 12/31/20X0
Assets
Current Assets:
Cash			$1,500,000
Accounts receivable, net			18,000
Inventory			50,000
Total current assets			1,568,000
Equipment			90,000
Goodwill			20,000
Total assets			$1,678,000
Liabilities and shareholders' equity
Shareholders' equity:
Common stock, 20,000 shares outstanding, $1 par			$20,000
Additional paid-in capital			280,000
Retained earnings			1,378,000
Total shareholders' equity			1,678,000
Total liabilities and shareholders' equity			$1,678,000

• Note that all additional paid-in capital (APIC) sub accounts (e.g., APIC-options and APIC-treasury stock), if any, are tracked in the “Additional paid-in capital” account on the Balance Sheet.

Please refer to the instructions and the table in this question. Enter the correct numeric figures in the following Balance Sheet and Income Statement for 20X1. Note that for the purpose of preparing the Balance Sheet at the end of each year:

• For investments, you need to classify whether they are current assets (i.e., short-term investment) or non-current assets (i.e., long-term investment);
• For bonds, you need to determine what portion of the bonds payable is current liability and what portion is non-current liability. Current portion of the bonds payable is the principal payment portion of the cash interest payments in the next year. Non-current portion is the remaining amount of the bonds payable; and
• For leases (as the lessee), you need to determine what portion of the lease obligation is current liability and what portion is non-current liability. Current portion of the lease obligation is the principal payment portion of the cash lease payment in the next year (i.e., the amortization amount of the lease obligation in the next year). Non-current portion is the remaining amount of the lease liability.

Project 3.1 Balance Sheet

Illini Company, Inc.
Income Statement
For the Year Ended December 31, 20X1
Sales	$1,132,357
Cost of sales (inventory/equipment)	692,000
Gross profit	440,357
Operating expenses:
Insurance expense	4,000
Utility expense	30,000
Rent expense	20,000
Compensation expense	[A]
Bad debt expense	[B]
Depreciation expense	[C]
Maintenance expense	3,000
Warranty expense	21,000
Rental expense (lease)	[D]
Pension expense	[E]
Selling expense-Initial issuance cost	10,000
Total operating expenses	[F]
Operating income	[G]
Other income (expense):
Investment revenue	7,500
Interest revenue	9,636
Unrealized holding losses - NI	[H]
Interest expense	(22,142)
Net income	[I]
Basic EPS	[J]
Diluted EPS	[K]

Project 3.2 Balance Sheet

Illini Company, Inc.
Income Statement
For the Year Ended December 31, 20X2
Sales	$1,200,000
Cost of sales (inventory/equipment)	820,000
Gross profit	380,000
Operating expenses:
Insurance expense	6,000
Utility expense	30,000
Rent expense	20,000
Compensation expense	110,000
Bad debt expense	6,350
Depreciation expense	38,090
Maintenance expense	1,000
Warranty expense	25,000
Rental expense (lease)	[A]
Pension expense	[B]
Impairment of goodwill	[C]
Total operating expenses	[D]
(Loss) on sale of PPE	[E]
Operating income	[F]
Other income (expense):
Interest revenue	[G]
Interest expense	[H]
Gain on early extinguishment of bonds	357
Gain on sale of investment	4,000
Net income	[I]
Basic EPS	[J]
Diluted EPS	[K]

Project 3.3 Balance Sheet

Illini Company, Inc.
Balance Sheet
	12/31/20X1	12/31/20X2
Assets
Current Assets
Cash	$1,336,056	$1,922,356
Short-term investment	[A]	[B]
Accounts receivable, net of allowance	34,150	67,800
Interest Receivable	9,636	6,999
Prepaid insurance	6,000	0
Inventory	310,000	50,000
Total current assets	1,733,841	2,047,155
Long-term investment	[C]	[D]
PPE, net	142,300	57,500
ROU assets, net	137,076	101,345
Investment in lease	[E]	[F]
Brand asset	0	16,000
Goodwill	[G]	[H]
Total assets	[I]	[J]
Liabilities and shareholders' equity
Current liabilities:
Wage payable	[K]	[L]
Unearned revenue	0	50,000
Estimated warranty liability	11,000	6,000
Accrued interest	12,704	9,445
Current portion of long-term bonds	[M]	[N]
Current portion of lease obligation	[O]	[P]
Total current liabilities	66,786	121,609
Non-current portion of long-term bonds	[Q]	[R]
Non-current portion of lease obligation	[S]	[T]
Pension liability	2,000	9,800
Total liabilities	286,437	236,341
Shareholders' equity:
Common stock	[U]	[V]
Additional paid-in capital - common stock	280,000	316,600
Preferred stock	100,000	100,000
Treasury stock	[W]	[X]
Retained earnings	[Y]	[Z]
Accumulated other comprehensive income	[i]	[ii]
Total shareholders' equity	1,919,138	2,070,652
Total liabilities and shareholders' equity	$2,205,575	$2,306,992