COMPREHENSIVE PROBLEM 3
This comprehensive problem requires the preparation of a comprehensive income
statement, statement of retained earnings, and statement of financial position (balance)
Mountain Sports, Inc.
2 to 3 hours
Medium
a.
226,000$
2,500
223,500$
100,575
b.
21,050$
12,250
33,300$
5,000
Deduct: Dividends declared
Ending Retained earnings, December 31, 2018
Add: Net income (from income statement)
For the Year Ended December 31, 2018
Mountain Sports, Inc.
Statement of Retained Earnings
Retained earnings, January 1, 2018
For the Year Ending December 31, 2018
Less: Sales returns and allowances
COMPREHENSIVE PROBLEM 3
Mountain Sports, Inc.
Income Statement
Cost of goods sold
Sales
Net Sales
122,925
20,440$
8,190
Office supplies expense
Income tax expense
Rent Expense
Utilities expense
Income before income taxes
Net income
Depreciation expense: office equipment
Insurance expense
Gross profit
Operating expenses:
Salaries
c.
19,200$
2,600
110,500$
12,750$
2,500
18,450$
48,450$
Sales taxes payable
Total current liabilities
Non-current liabilities:
Total Liabilities
Bonds payable
Premium on bonds payable
Deferred income taxes
5,000$
18,000
13,000
28,300
110,500$
Retained earnings
Less: Treasury stock (200 common shares at cost)
Total Stockholders’ Equity
Mountain Sports, Inc.
Current assets:
Accounts receivable
Notes payable
LIABILITIES
Current liabilities:
Accounts payable
Total Assets
Additional paid-in capital (common stock)
COMPREHENSIVE PROBLEM 3
MOUNTAIN SPORTS, INC.
(continued)
Cash
December 31, 2018
ASSETS
Statement of Financial Position
Preferred stock, $20 par value, 250 shares issued and
Common Stock, $10 par value, 1,800 shares issued
outstanding
STOCKHOLDERS’ EQUITY
42,000$
Total current assets
Non-current Assets
Prepaid rent
Office equipment
Merchandise inventory
Less: Accumulated depreciation
Land
Office supplies