Camry Company
Income statement
December 31, 2021
Sales
Cost of sales:
Merchandise inventory – January 1
Purchases
2,280,000
Less: Purchases returns
70,000
Goods available for sale
Less: Merchandise inventory – December 31
Gross income
Expenses:
Salaries
Supplies
Taxes
Other expenses
Doubtful accounts
Depreciation
Bank service charge
Miscellaneous expense
Net income
3,990,000
700,000
2,210,000
2,910,000
650,000
405,000
95,000
45,000
245,000
60,000
35,000
10,000
35,000
2,260,000
1,730,000
930,000
800,000
Camry Company
Statement of Financial Position
December 31, 2021
Assets
Current assets:
Cash
Accounts receivable, net (50,000)
Merchandise inventory
Prepaid supplies
Noncurrent assets:
Equipment
Less: Accumulated depreciation
Total assets
760,000
400,000
650,000
20,000
350,000
135,000
1,830,000
215,000
2,045,000
Liabilities and Equity
Current liabilities:
Accounts payable
Note payable
Accrued salaries payable
Equity:
Capital – January 1
Add: Net income
Total
Less: Drawings
Total liabilities and equity
260,000
80,000
15,000
1,130,000
800,000
1,930,000
240,000
355,000
1,690,000
2,045,000
Accounts receivable – December 31
Cash sales, collection and advances
Advances from customers – January 1
Total
Less: Accounts receivable – January 1
Advances from customers – December 31
Sales
Sales price
Less: Carrying amount of equipment sold
Gain on sale of equipment
Accounts payable – December 31
Cash purchases and payments
Total
Less: Accounts payable – January 1
Purchases
Insurance paid
Prepaid insurance – January 1
Total
Less: Prepaid insurance – December 31
Insurance expense
200,000
3,030,000
90,000
3,320,000
120,000
50,000
170,000
3,150,000
45,000
20,000
25,000
100,000
1,640,000
1,740,000
170,000
1,570,000
80,000
35,000
115,000
25,000
90,000
Depreciation:
Building (2,000,000 x 10%)
Equipment (800,000 x 10%)
Equipment – new (200,000 x 10% x 3/12)
Total
200,000
Salaries paid
Accrued salaries – December 31
Total
Less: Accrued salaries – January 1
Salaries expense
390,000
30,000
420,000
20,000
400,000
Doubtful accounts (5% x 200,000)
10,000
80,000
5,000
285,000
Ultimate Company
Income statement
December 31, 2021
Sales
Cost of sales:
Inventory – January 1
Purchases
Goods available for sale
Less: Inventory – December 31
Gross income
Gain on sale of equipment
Total income
Expenses:
Insurance
Depreciation
Salaries
Doubtful accounts
Other expenses
Net income
3,150,000
230,000
1,570,000
1,800,000
245,000
90,000
285,000
400,000
10,000
135,000
1,555,000
1,595,000
25,000
1,620,000
920,000
700,000
Ultimate Company
Statement of Financial Position
December 31, 2021
Assets
Current assets:
Cash
Accounts receivable, net (10,000)
Inventory
Prepaid insurance
Noncurrent assets:
Land
Building
2,000,000
Less: Accumulated depreciation
900,000
Equipment
950,000
Less: Accumulated depreciation
295,000
Total assets
905,000
190,000
245,000
25,000
1,365,000
500,000
1,100,000
655,000
2,255,000
3,620,000
Liabilities and equity
Current liabilities:
Accounts payable
Accrued salaries
Advances from customers
Dividends payable
Equity:
Share capital
Retained earnings
Total liabilities and equity
100,000
30,000
50,000
125,000
2,500,000
815,000
Accumulated depreciation – January 1
Add: Depreciation for 2019
Total
Less: Accumulated depreciation on equipment sol
Accumulated depreciation – December 31
Retained earnings – January 1
Net income
Total
Less: Dividends – June 30 (5%x 2,500,000)
Dividends – December 31
Retained earnings – December 31
305,000
3,315,000
3,620,000
240,000
85,000
325,000
30,000
295,000
365,000
700,000
1,065,000
125,000
125,000
250,000
815,000