Preparing Both an Income Statement and a Balance Sheet from a Trial Balance – Dynamite Sales (organized as a corporation on September 1, 2010) has completed the accounting cycle for the second year, ended August 31, 2012. Dynamite also has completed a correct trial balance as follows:
| DYNAMITE SALES Don't use plagiarized sources. Get Your Custom Essay on preparing both an income statement and a balance sheet from a trial balance 555508 For $10/Page 0nly | ||
| Account Titles | Debit | Credit |
| Cash | $47,700 | |
| Accounts receivable | 38,320 | |
| Office supplies | 270 | |
| Company vehicles (delivery vans) | 27,000 | |
| Accumulated depreciation, company vehicles | $9,000 | |
| Equipment | 2,700 | |
| Accumulated depreciation, equipment | 900 | |
| Accounts payable | 16,225 | |
| Income taxes payable | 0 | |
| Salaries payable | 1,350 | |
| Long-term debt | 25,000 | |
| Capital stock (par $1; 29,000 shares) | 29,000 | |
| Paid-in capital | 4,500 | |
| Retained earnings (on September 1, 2011) | 6,615 | |
| Dividends declared and paid during the current year | 7,200 | |
| Sales revenue | 81,000 | |
| Cost of goods sold | 27,000 | |
| Operating expenses (detail omitted to conserve time) | 16,200 | |
| Depreciation expense (on vehicles and including $3,450 on equipment) | 4,950 | |
| Interest expense | 2,250 | |
| Income tax expense (not yet computed) | ||
| Totals | $173,590 | $173,590 |
Required:
Complete the financial statements, as follows:
a. Classified (multiple-step) income statement for the reporting year ended August 31, 2012. Include income tax expense, assuming a 30 percent tax rate. Use the following subtotals: Gross Profit, Total Operating Expenses, Income from Operations, Income before Income Taxes, and Net Income, and show EPS.
b. Classified balance sheet at the end of the reporting year, August 31, 2012. Include (1) income taxes for the current year in Income Taxes Payable and (2) dividends in Retained Earnings. Use the following captions (list each item under these captions).
| Assets | Stockholders’ Equity |
| Current assets | Contributed capital |
| Noncurrent assets | Retained earnings |
| Liabilities | |
| Current liabilities | |
| Long-term liabilities |
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