Lan Services Incorporated

Income Statement

For the Year Ended December 31, 2020

Sales Revenue 507,000
Cost of Goods Sold 150,000
Operating Expenses (excluding depreciation) 111,000
Depreciation Expense 9,000
Loss on disposal for plant assets 3,000
Interest Expense 42,000 315,000
Income before taxes 192,000
Income tax expense 47,000
Net Income 145,000
 Lan Services Incorporated

Comparative Financial Position

December 31, 2020

Change in
Assets 2020 2019 Account Balance
Increase / Decrease
Current Assets
Cash 55,000 33,000 22,000
Accounts Receivable 20,000 30,000 10,000
Inventory 15,000 10,000 5,000
Prepaid Expenses 5,000 1,000 4,000
Property, plant, and equipment
Land 130,000 20,000 110,000
Buildings 160,000 40,000 120,000
Accumulated Depreciation - Buildings 11,000 5,000 6,000
Equipment 27,000 10,000 17,000
Accumulated Depreciation - Equipment 3,000 1,000 2,000
Total Assets 398,000 138,000

Liabilities and Shareholder's Equity

Current Liabilities
Accounts Payable 28,000 12,000 16,000
Income taxes payable 6,000 8,000 2,000
Long-term liabilities
Bonds Payable 130,000 20,000 110,000
Stockholder's Equity
Common stock 70,000 50,000 20,000
Retained Earnings 164,000 48,000 116,000
Total Liabilities and Shareholder's Equity 398,000 138,000
 Change in
Account Balance
Increase / Decrease

Increase
Decrease
Increase
Increase

Increase
Increase
Increase
Increase

Increase
Decrease

Increase

Increase
 Preparation of Entries for Reconciliation
Debit Credit
a. Operating - Decrease in Accounts Receivable 10,000
Accounts Payable 10,000
b. Inventory 5,000
Operating - Increase inInventory 5,000
c. Prepaid Expenses 4,000
Operating - Increase in Prepaid Expenses 4,000
d. Land 110,000
Bonds Payable 110,000
e. Building 120,000
Investing - Purchase in Equipment 120,000
f. Equipment 25,000
Investing - Purchase in Equipment 25,000
g. Investing - Sale of Equipment 4,000
Operating - Loss on Disposal of Plant Assets 3,000
Accumulated Depreciation - Equipment 1,000
Equipment 8,000
h. Operating - Increase in Accounts Payable 16,000
Accounts Payable 16,000
i. Income Taxes Payable 2,000
Operating - Decrease in Income Taxes Payable 2,000
j. Financing - Increase in Common Stock 20,000
Common Stock 20,000
k. Operating - Depreciation Expense - Building 6,000
Accumulated Depreciation - Building 6,000
l. Operating - Depreciation Expense - Equipment 3,000
Accumulated Depreciation - Equipment 3,000
m. Operating - Net Income 145,000
Retained Earnings 145,000
n. Retained Earnings 29,000
Financing - Payment of Dividends 29,000
o. Cash 22,000
Increase in Cash 22,000
 Lan Services Incorporated

Worksheet

Statement of Cash Flows for the Year Ended December 21, 2020
Reconciling Items
Balance Debit Credit Balance
Balance Sheet Accounts 12/31/19 12/31/20
Debits
Cash 33,000 22,000 55,000
Accounts Receivable 30,000 10,000 20,000
Inventory 10,000 5,000 15,000
Prepaid Expenses 1,000 4,000 5,000
Land 20,000 110,000 130,000
Buildings 40,000 120,000 160,000
Equipment 10,000 25,000 8,000 27,000
Total 144,000 412,000
Credits
Accounts Payable 12,000 16,000 28,000
Income Tax Payable 8,000 2,000 6,000
Bonds Payable 20,000 110,000 130,000
Accumulated Depreciation - Buildings 5,000 6,000 11,000
Accumulated Depreciation - Equipment 1,000 2,000 3,000
Common Stock 50,000 20,000 70,000
Retained Earnings 48,000 29,000 145,000 164,000
Total 144,000 412,000

Statement of Cash Flows

Operating Activities
Net Income 145,000
Decrease in accounts receivable 10,000
Increase in inventory 5,000
Increase in prepaid expenses 4,000
Increase in accounts payable 16,000
Decrease in income taxes payable 2,000
Depreciation expense - Building 6,000
Depreciation expense - Equipment 3,000
Loss on disposal of plant asset 3,000
Investing activities
Purchase of building 120,000
Purchase of equipment 25,000
 Sale of equipment 4,000
Financing activities
Issuance of common stock 20,000
Payment of dividends 29,000
Totals 524,000 502,000
Increase in cash 22,000
Totals 524,000 524,000