Marmidan Mold Shop Inc. designs and builds molds for the automotive and aircraft industries. The account balances in the company’s general ledger on January 1, 2020 (first day of the new annual fiscal year) were as follows (all account balances are in their normal position):
Cash $ 3,700
Accounts receivable 5,900
Supplies inventory 29,300
Land 168,500
Buildings 116,500
Accumulated depreciation, buildings 37,500
Equipment 58,500
Accumulated depreciation, equipment 18,000
Accounts payable 25,200
Income tax payable 16,600
Interest payable 4,200
Wages payable (due in 2020) 15,700
9% Notes payable ($10,000 due June 30, 2021,
balance due June 30, 2022) 61,500
Common shares 151,500
Retained earnings, Dec. 31, 2019 52,200
Transactions during 2020:
1.The company provided sales services to customers, on credit, for $ 210,300. In addition, the company produced cash sales to customers of $ 62,300.
2.Accounts receivable from customers of $ 15,600 remains to be collected at December 31, 2020.
3.Inventory of $ 62,900 was purchased on credit and debited to the supplies inventory account.
4.Minor parts were purchased with cash for $ 7,400 and debited to the supplies inventory account.
5.Wages payable at the beginning of 2020 were paid early in 2020. In addition, wages were earned by employees and paid during 2020 in the amount of $ 112,000.
6.Income tax payable at the beginning of 2020 was paid early in 2020.
7.Payments of $ 73,000 were made to creditors for supplies previously purchased on credit.
8.One year’s interest at 9% was paid on the notes payable at July 1, 2020.
9. During 2020, Don Tallint, the principal shareholder, purchased a new car for his wife
Debbie. The new car cost $ 45,000 and was paid for with cash from personal sources.
10.Property taxes were paid on the land and buildings in the amount of $ 17,000 with cash.
11.Dividends were declared and paid in cash in the amount of $ 7,200.
The information available for year-end adjusting entries:
12.•Supplies inventory was counted on December 31, 2020, and it was determined the supplies inventory still on hand at yearend was $ 31,900.
13. •Annual depreciation on the buildings is $ 6,000.
14•Annual deprecation on the equipment is $ 5,500
15•Additional wages of $4,000 were earned but are unpaid and unrecorded at December 31, 2020.
16•Interest for six months at 9% per year on the notes payable is unpaid and unrecorded at December 31, 2020.
17•Income taxes of $ 16,500 were unpaid and unrecorded at December 31, 2020.
Question: Prepare a statement of retained earnings for Marmidan Mold Shop Inc. for the year ended December 31, 2020.
| Statement of Profit and Loss A/c | |
| Particulars | Amount |
| Sales to Customer (210300+62300) | 272600 |
| Less:Cost of Goods Sold (29300+62900+7400-31900) | 67700 |
| Operating Profit for the year | 204900 |
| Less: Expenses | |
| Wages Expense (15700+112000+4000) | 131700 |
| Income tax Paid(16600+16500) | 33100 |
| Interest Payable{(61500*9%)+(51500*9%*1/2)} | 7853 |
| Propert Taxes Paid | 17000 |
| Depreciation on Building and Equipment(6000+5500) | 11500 |
| Net Profit for the Year | 3747 |
| Statement of Retained Earnings | |
| Particulars | Amount |
| Opening Balance as on 01.01.20 | 52200 |
| Add: Current Year Profit | 3747 |
| Less: Dividend Paid during the Year | 7200 |
| Closing Balance as on 31.03.20 | 48747 |
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