PRACTICE PROBLEM. The information below pertains to the General Company (which makes food products) for thefiscal year ending December 31, 2014. It is listed in no particular order. The company is locatedin a dry area that has never had floods.
Loss From a Write-off of Obsolete Inventories. . 10,000
Cash & Equivalents (Includes $5,000 for a Long-term Endowment). . . . . . . . . . . . 10,000
Accounts Payable . . . . . . . . . . . . . . . . 25,000
Patent (Net of $3,000 Amortization). . . . . . . 12,000
Cash Dividends Declared & Paid . . . . . . . . . 17,000
Gain on Sale of Equipment . . . . . . . . . . . 5,000
Gain From Correcting an Error Made in 2013 (before tax). . . . . . . . . . . 50,000
Investments in bonds – Trading (Mature in 2021; market value is $18,000, while cost basis is $20,000) . . . . . . . . . . . . . . 20,000
Property Loss From Flood (before tax) . . . . . 60,000
Interest Expense . . . . . . . . . . . . . . . $ 20,000
Loss on Operations and Disposal of Discontinued Solar Powered Flashlight Division (before tax) 50,000Land (Includes $20,000 of Vacant Land Being Held For Sale) . . . . . . . . . . . . . . . . 80,000
Net Sales . . . . . . . . . . . . . . . . . . . 700,000
Selling, General & Administrative Expenses . . . 200,000
Accumulated Depreciation (buildings) . . . . . . 55,000
Bond Sinking Fund . . . . . . . . . . . . . . . 30,000
Treasury Stock . . . . . . . . . . . . . . . . . 15,000Buildings . . . . . . . . . . . . . . . . . . .
200,000Allowance for Doubtful Accounts (receivable expected to not be collected). . . . . . . . . 10,000
Prepaid Insurance Expense (Includes $5,000Prepaid for 2016). . . . . . . . . . . . . . . 15,000
Notes Payable (Includes $5,000 Due Within The Next Year) . . . . . . . . . . . . . . . . . . 80,000
Accounts Receivable . . . . . . . . . . . . . . 54,000
Cash Surrender Value of Executive Life Insurance 50,000Retained Earnings, January 1, 2014 . . . . . . . 100,000
Common Stock . . . . . . . . . . . . . . . . . 250,000
Cost of Goods Sold . . . . . . . . . . . . . . . 400,000
Inventory . . . . . . . . . . . . . . . . . . . 50,000
Paid-in Capital > Par Value – Common Stock . . . 19,000
Additional information: Assume a 40% tax rate and that all income statement items are shown before tax.Also, assume 10,000 shares of common stock are authorized, although only 6,500 shares are issued and 6,000outstanding. There were no items that would be considered other comprehensive income, either in this yearor in prior years.DirectionsPrepare an income statement, statement of retained earnings, and balance sheet for the fiscal year endedDec. 31, 2014 in good form.
