Question

The following reflects Ace Inc.’s adjusted accounts at their normal balances for the year ended December 31, 2019.

Cash	80,000
Accounts Receivable	15,000
Supplies	3,000
Inventory	150,000
Prepaid Insurance (represents 2 years)	50,000
Equipment	300,000
Accumulated Depreciation - Equipment	40,000
Land	75,000
Patent	5,000
Accounts Payable	145,000
Note Payable (due in 3 equal annual installments)	36,000
Deferred Revenue (represents 8 months)	16,000
Common Stock (50,000 shares authorized, $5 par, 20,000 shares issued and outstanding	100,000
Additional Paid in Capital	30,000
Retained Earnings	111,000
Dividends	70,000
Sales Revenue	1,360,000
Sales Discounts	60,000
Cost of Goods Sold	455,000
Wages Expense	435,000
Insurance Expense	25,000
Rent Expense	40,000
Interest Expense	10,000
Income Tax Expense	65,000

Required: Prepare a multi-step income statement, statement of retained earnings, and classified balance sheet in proper format for Ace Inc. for the year ended December 31, 2019.

Answer 1

Income Statement-Ace Inc.
For the Year Ended December 31, 2019
Revenues:
Sales Revenue	$1,360,000.00
Less: Sales Discount	-$60,000.00
Net Sales Revenue		$1,300,000.00
Less: Cost of Goods Sold		$455,000.00
Gross Profit		$845,000.00
Operating   Expense
Wages Expense	$435,000.00
Insurance expense	$25,000.00
rent Expense	$40,000.00
Interest Expense	$10,000.00
Total Operating expense		$510,000.00
Net Income before tax		$335,000.00
Less: Income Tax		-$65,000.00
Net Income		$270,000.00
Statement of Retained Earnings
For the Year Ended December 31, 2019
Retained Earnings, January 1, 2019	$111,000.00
Ad: Net Income For The Year	$270,000.00
Less: Dividends	-$70,000.00
Retained Earnings, December 31, 2019	$311,000.00

Balance Sheet- Ace
For the Year Ended December 31, 2019
Assets
Current Asset
Cash	$80,000.00
Accounts Receivable	$15,000.00
Supplies	$3,000.00
Inventory	$150,000.00
Prepaid Exepnse	$50,000.00	$298,000.00
Non Current Asset
Equipment	$300,000.00
Less: Accumulted Depreciaiton	-$40,000.00
Land	$75,000.00
Patent	$5,000.00
Total Non Current Asset		$340,000.00
Total Asset		$638,000.00
Liabilities
Current liabilities
Accounts Payable	$145,000.00
Notes Payable	$12,000.00
Deferred Revenue	$16,000.00	$173,000.00
Non Current Liabilities
Note Payable	$24,000.00	$24,000.00
Tototal Liabilities		$197,000.00
Stockholders' Equity
Common Stock	$100,000.00
Additioanl Capital n Excess of par	$30,000.00
Retained Earnings	$311,000.00
Tototal Stockholders' Equity		$441,000.00
Tototal Liabilities And Stockholders' Equity		$638,000.00