Exercises Financial Statements

Given are the following positions of a Manufacturing Company on the December 31, 2018.
(Hint: Not all positions will be needed in a statement)

Interest Expense € 2,000

Administrative Expenses 27,000
Beginning Retained Earnings 16.890
Depreciation Expense 5,200
Cash 26,900
Trade Payable 3,300
Decrease in Finished Goods 49,700
Goodwill 20,000
Rent Expense 7,200
Research & Development Exp. 15,000
Wage Expense 59,200
Prepaid Rent 1,400
Paid-in Capital 29,000
Material Expenses 45,000
Trade Receivable 13,600
Wages Payable 3,200
Equipment 49,500
Sales 249,600
Selling Expenses 35,000
Inventory 14,400
Long-term Debt 20,000
Utility Expenses 5,000
Dividends Declared 21,000
Cost of Sales 94,300
Dividends Payable 21,000
Taxes 30%

1. Prepare a classified Balance Sheet for the company.

2. Prepare a Income Statement using the “Cost of Sales”-Method
3. Prepare a Income Statement using the “Nature of Expense”-Method
Solution

1) Balance Sheet
December 31, 2018

Non-Current Assets:
Goodwill €20,000
Equipment 49,500 69,500
Current Assets:
Inventory 14,400
Trade Receivable 13,600
Prepaid Rent 1,400
Cash €26,900
Total Current Assets €56,300
Total Assets €125,800

Stockholders' Equity:
Paid-in Capital 29,000
Retained Earnings 49,300
Total Stockholders' Equity 58,300
Non-Current Liabilities:
Long-term Debt 20,000
Current Liabilities:
Trade Payable € 3,300
Dividends Payable 21,000
Wages Payable 3,200
Total Current Liabilities €27,500
Total liabilities 47,500
Total Liabilities and Stockholders' Equity €125,800
2) Income Statement (Cost of Sales Method)
December 31, 2018

Sales €249,600
Cost of Sales 94,300
Gross Profit 155,300
Selling Expenses 35,000
Administrative Exp. 27,000
Research & Development Exp. 15,000
Operative Profit 78,300
Interest Expenses 2,000
Taxes 22,890
Net Income 53410

Income Statement (Nature of Expenses Method)

December 31, 2018

Sales €249,600
Decrease in Finished Goods 49,700
Material Expenses 45,000
Wage Expense 59,200
Depreciation Expense 5,200
Rent Expense 7,200
Utility Expenses 5,000
Operative Profit 78,300
Interest Expenses 2,000
Taxes 22,890
Net Income 53,410