2-48Test Bank for Survey of Accounting, First Edition(Beg. ret. earn. −Net loss −Div.)Solution 124(25 min.)(b)SNYDER CORPORATIONBalance SheetJuly 31, 2017AssetsCurrent assetsCash$20,200Accounts receivable12,780Total current assets$32,980Property, plant, and equipmentEquipment21,000Less: Accumulated depreciation—equipment6,00015,000Total assets $47,980(Cash + Acc. rec. + Equip. −Acc. depr.)Liabilities and Stockholders' EquityCurrent liabilitiesAccounts payable$ 4,100Salaries and wages payable2,580Total current liabilities$6,680Notes payable (due 2019)1,800Total liabilities8,480Stockholders' equityCommon stock16,000Retained earnings23,500Total stockholders' equity39,500Total liabilities and stockholders' equity$47,980(Acc. pay. + Sal./wag. pay. + Not. pay. + Com. stock + End. ret. earn.)FOR INSTRUCTOR USE ONLY
2-49A Further Look at Financial StatementsEx. 125These items are taken from the financial statements of Drew Corporation for 2017.Retained earnings (beginning of year)$33,000Utilities expense2,000Equipment56,000Accounts payable15,300Cash15,900Salaries and wages payable3,000Common stock13,000Dividends14,000Service revenue78,000Prepaid insurance3,500Maintenance and repairs expense1,800Depreciation expense3,300Accounts receivable14,200Insurance expense2,200Salaries and wages expense47,000Accumulated depreciation—equipment17,600InstructionsPrepare an income statement and a retained earnings statement for the year ended December31, 2017 and a classified balance sheet as of December 31, 2017.Ans: N/A, LO: 1, Bloom: AP, Difficulty: Medium, Min: 25, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC:Problem Solving, IMA: ReportingSolution 125(25 min.)DREW CORPORATIONIncome StatementFor the Year Ended December 31, 2017RevenuesService revenue$78,000ExpenseSalaries and wages expense$47,000Depreciation expense3,300Insurance expense2,200Utilities expense2,000Maintenance and repairs expense1,800Total expenses56,300Net income$21,700(Ser. rev. −Sal./wag. exp. −Dep. exp. −Ins. exp. −Util. exp. −Main./rep. exp.)DREW CORPORATIONRetained Earnings StatementFor the Year Ended December 31, 2017Retained earnings, January 1, 2017$33,000Add: Net income21,70054,700Less: Dividends14,000Retained earnings, December 31, 2017$40,700FOR INSTRUCTOR USE ONLY
2-50Test Bank for Survey of Accounting, First Edition(Beg. ret. earn. + Net inc. −Div.)Solution 125(Cont.)DREW CORPORATIONBalance SheetDecember 31, 2017AssetsCurrent assetsCash$15,900Accounts receivable14,200Prepaid insurance3,500Total current assets$33,600(Cash + Acc. rec. + Prep. ins.) Property, plant, and equipmentEquipment$56,000Less: Accumulated depreciation—equipment17,60038,400Total assets$72,000(Tot. cur. assets + Equip. −Acc. dep.) Liabilities and Stockholders' EquityCurrent liabilitiesAccounts payable$15,300Salaries and wages payable3,000Total current liabilities$18,300Stockholders' equityCommon stock13,000Retained earnings40,700Total stockholders' equity53,700Total liabilities and stockholders' equity$72,000(Acc. pay. + Sal./wag. pay. + Com. stock + End. ret. earn.)Ex. 126The Dobson Company gathered the following condensed data for the year ended December 31,2017:Cost of goods sold$ 720,000Net sales1,249,000Administrative expenses289,000Interest expense68,000Dividends paid38,000Selling expenses45,000InstructionsPrepare an income statement for the year ended December 31, 2017.