Repare income statement and retained earnings statement

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Reference no: EM131572626

Problem -

GeneralProducts Inc is incorporated in Nevada, USA on Jan 1,2013 to takeover a local retail chain. The objective of the company is to suuply goods of every day use to customers at the most competitive prices. GeneralProducts has chain of stores throughout USA. The retial operations of the company are so designed that customers can shop seamlessly in stores and online.

Balance Sheet of GeneralProducts Inc. on Dec 31, 2015

Assets

 


$

Current Assets

 



Cash and cash equivalent

 

11,980


Accounts Receivables

 

20,520


Inventory

 

317,060


Inventory of Premiums ( @$1.10 per premium)

 

660


Total Current Assets

 


350,220

Long Term Assets

 



Investments

 

66,775


Property Plant and Equipment

750,000



Less Accumulated Depreciation

90,000

660,000


Total Long Term Assets

 


726,775

Intangible Assets

 



Trade Marks

 


190,000

Total Assets

 


1,266,995

Liabilities and Shareholders' Equity

 



Current Liabilities

 



Accounts Payable

 

50,722


Liability for Premiums and Coupons

 

550


 

          8,000


Accrued Interest on 6% Bonds Payable

 

3,000


Total Current Liabilities

 


62,272

6% Bonds  Payable due 2020

 

100,000


Unamortized Discount on Bonds Payable

 

6,732

93,268

Total Liabilities

 


155,540

Stockholder's Equity

 



Common Stock

 



125,000 shares, par value $1  authorized

 



100,000 shares issued and outstanding

 

130,000


Paid inCapital in Excess of Par 

 

946,000


Retained Earnings

 

35,455


total nStockholders' Equity

 


1,111,455


 



Total Liabilities and Stockholders' Equity

 


1,266,995







GeneralProducts provides us financial and business related data for 2016 below.

1. Trades Marks were acquired for $200,000 in 2015.Estimated useful at the time of acquisition was 20 years. There was a litiagation brought out by a competitor against the Trade Mark. GeneralProduct could successfully defended this litigation at a cost of $ 45,000. New useful life of Trade Mark is estimated to be 25 years from the date of acquisition.

2. All sales are on credit and totalled $ 940,560. COGS are $780,650.

3. Included in the total sales of $940,560 are the sales of GeneralProducts brand 6000 soap powder boxes. GeneralProducts includes one coupon in every soap powder box. Customers can redeem 4 coupons for one Kitchen untensil. Based on past experience 60% of the coupons are redeemed by customers. During 2016 3,400 coupons were redeemed. Purchase of premiums during 2016 totalled 1,000 premiums @ $1.10 each on credit.

4. 6% Bonds Payable are issued on Jan 1 2015 to yield 8% interest. Interest is paid semiannualy on Jan 1st and June 30th. General Products can redeem these Bonds any time after June 30,2016 @ 101.

5. To take advantage of lower interst rates and to finance the redemption of 6% Bonds, on Sept.1st 2016, GeneralProducts issued 5%Bonds in the face value of $100,000 to yield 6%. The maturity period of these 5% Bonds is 10 years and interest is paid semiannually on 1st Jan and 30th June. The proceeds from the issue of 5% Bonds are used to redeem 6% Bonds Payable @ 101 on Sept.1st 2016.

6. Selling Administrative Expenses excluding depreciation are $87,345. PP&E is depreciated on Striaght Line Method over 25 years of life.

7. Cash collected from customers totalled $906,450

8. Cash paid to suppliers for credit purchases totalled $728,254

9. Purcahses of inventory totalled $ 689,525.All purchases are on credit.

10. GeneralProducts purchased Land for $30,000 for construction of building

Requirements

1. Record the necessary journal entries for 2016

2. Prepare Income Statement and Retained Earnings Statement for the year 2016

3. Prepare Balance Sheet on December 31, 2016

4. Show full work of all the financial items reported in Income Statement and Balance Sheet.

Attachment:- Assignment.rar

Reference no: EM131572626

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