Reference no: EM132554171
Delta Corporation's capital structure consists of 20,000 common shares at December 31. At December 31, 2020 an analysis of the accounts and discussions with company officials revealed the following information:
Sales................................................................................................. $1,300,000
Inventory, January 1, 2020.............................................................. 150,000
Purchases......................................................................................... 728,000
Purchase discounts........................................................................... 18,000
Inventory, December 31, 2020........................................................ 130,000
Tornado loss (net after $18,000 tax) .............................................. 42,000
Selling expenses.............................................................................. 148,000
Cash................................................................................................. 60,000
Accounts receivable........................................................................ 90,000
Common shares............................................................................... 200,000
Accumulated depreciation............................................................... 180,000
Dividend revenue............................................................................. 22,000
Unearned service revenue................................................................ 4,400
Accrued interest payable................................................................. 1,000
Land................................................................................................. 370,000
Patents.............................................................................................. 100,000
Retained earnings, January 1, 2020................................................. 350,000
Interest expense............................................................................... 15,000
Prior years cumulative effect of change from straight-line to accelerated
depreciation (net after $15,000 tax)..................................................... 45,000
General and administrative expenses.............................................. 172,000
Dividends declared.......................................................................... 52,750
Allowance for doubtful accounts..................................................... 5,000
Notes payable (maturity July 1, 2021)............................................. 200,000
Machinery and equipment............................................................... 450,000
Materials and supplies inventory....................................................... 40,000
Accounts payable............................................................................ 60,000
Unless indicated otherwise, you may assume a 25% income tax rate.
Required:
Question a) Prepare, in good form, a multiple-step income statement
Question b) Prepare, in good form, a retained earnings statement.