CASE 12
Aubrae and Tylor Williamson began operations of their furniture repair shop
(Furniture Refinishers, Inc.) on January 1, 2019. The annual reporting period
ends December 31. The trial balance on January 1, 2020, was as follows:
Transactions during 2020 follow:
a. Borrowed $20,000 cash on July 1, 2020, signing a one-year, 10 percent
note payable.
b. Purchased equipment for $18,000 cash on July 1, 2020.
c. Sold 10,000 additional shares of capital stock for cash at $0.50 market
value per share at the beginning of the year.
d. Earned $70,000 in revenues for 2020, including $14,000 on credit and the
rest in cash.
e. Incurred $27,000 in wages expense and $8,000 in miscellaneous expenses
for 2020, with $7,000 on credit and the rest paid with cash. Note: Wages
are paid in cash.
f. Purchased additional small tools, $3,000 cash.
g. Collected accounts receivable, $8,000.
h.
i.
j.
k.
Paid accounts payable, $11,000.
Purchased $10,000 of supplies on account.
Received a $3,000 deposit on work to start January 15, 2021.
Declared a cash dividend on December 1, $10,000; paid on December 31.
Data for adjusting entries:
l. Supplies of $4,000 and small tools of $8,000 were counted on December
31, 2020 (debit Miscellaneous Expenses).
m. Depreciation for 2020, $2,000.
n. Interest accrued on notes payable (to be computed).
o. Wages earned since the December 24 payroll but not yet paid, $3,000.
p. Income tax expense was $4,000, payable in 2021.
Prepare an income statement (including earnings per share), statement of
stockholders’ equity, and balance sheet.
REQUIRED 1: Prepare an income statement (including earnings per share). (Round
"Earnings per share" to 2 decimal places.)
FURNITURE REFINISHERS, INC.
Income Statement
For the Year Ended December 31, 2020
Operating revenues:
Operating expenses:
Total operating expenses
Other item:
0
Earnings per share
REQUIRED 2:
Prepare a statement of stockholders’ equity.
FURNITURE REFINISHERS, INC.
Statement of Stockholders’ Equity
For the Year Ended December 31, 2020
Additional
Common
Retained
Paid-in
Stock
Earnings
Capital
Balance, January 1, 2020
Total
Stockholders'
Equity
Balance, December 31, 2020
REQUIRED 3:
Prepare a balance sheet. (Items to be deducted must be indicated with a minus sign.)
FURNITURE REFINISHERS, INC.
Balance Sheet
At December 31, 2020
Assets
Liabilities
Current assets:
Total current assets
Current liabilities:
0
Total current liabilities
0
Stockholders' equity
Equipment - Net book
value
Total assets
0
Total stockholders' equity
Total liabilities and stockholders'
$0
equity
0
$