The spreadsheet lists account balances from January 1, 2019 and December 31, 2019. Using this information and the additional information below, generate a multi-step income statement, statement of retained earnings, balance sheet and statement of cash flows for Widgets and Stuff, Inc. Pay attention to proper formatting, remember to report earnings per share on the income statement, there are 200,000 weighted average shares of common stock outstanding.

QUESTION

The spreadsheet lists account balances from January 1, 2019 and December 31, 2019. Using this information and the additional information below, generate a multi-step income statement, statement of retained earnings, balance sheet and statement of cash flows for Widgets and Stuff, Inc. Pay attention to proper formatting, remember to report earnings per share on the income statement, there are 200,000 weighted average shares of common stock outstanding.

Other issues/ items to consider:

1. Sold equipment costing 50,000 for 45,150, book value at the time of sale was 37,650
2. Equipment was purchased for cash
3. Redeemed current bond issue on Jan 2, 2019 for carrying amount. (no gain or loss) Remember when bonds are redeemed the bonds payable account is cleared, so it is 0 before the December bonds are issued.
4. Issued new bonds on Dec 30, 2019 at a premium.
5. Have 70% ownership of Pearson Company included in the equity investments. Income for the year for Pearson was 100,000. So, for your income statement, this is the investment income revenue, reported under other revenue and gains. On your statement of cash flows this is deducted from net income since it is a noncash event. Increase in Investment Income Revenue (70,000) on your statement of Cash Flows operating activities section
6. Purchased more equity investments. To determine the amount purchased make sure you deduct the 70,000 that was a noncash increase in this account. So, take your ending balance – 70,000 – beginning balance = equity investments purchased
7. Purchased building for cash
8. Declared dividends of 250,000
9. Loss due to a flood consisted of equipment being disposed of that had an original cost of 251,000 and accumulated depreciation of 120,000
10. Discontinued operations had equipment that was disposed of that had an original cost of 85,000 and accumulated depreciation of 40,000.
11. Current portion of Notes Payable 40,000
12. Current portion of Mortgage Payable 50,000

13. ANSWER

14. Financial Statements Analysis for Widgets and Stuff, Inc. (2019)

    Introduction
    In this analysis, we will generate the financial statements for Widgets and Stuff, Inc. for the year ending December 31, 2019. The provided information includes the account balances at the beginning and end of the year, as well as various transactions and events that occurred during the year. The financial statements to be prepared include the multi-step income statement, statement of retained earnings, balance sheet, and statement of cash flows.

    Multi-Step Income Statement:
    Widgets and Stuff, Inc. Income Statement for the Year Ended December 31, 2019

    Revenue:
    Sales Revenue $_________

    Operating Expenses:
    Cost of Goods Sold $_________
    Depreciation Expense $_________
    Selling Expenses $_________
    Administrative Expenses $_________

    Total Operating Expenses $_________

    Operating Income $_________

    Other Revenue and Gains:
    Investment Income Revenue (Pearson Company) $100,000

    Income Before Tax $_________

    Income Tax Expense $_________

    Net Income $_________

    Earnings Per Share (EPS) $_________

    Statement of Retained Earnings:
    Widgets and Stuff, Inc. Statement of Retained Earnings for the Year Ended December 31, 2019

    Retained Earnings, January 1, 2019 $_________

    Net Income $_________

    Less: Dividends $250,000

    Retained Earnings, December 31, 2019 $_________

    Balance Sheet:
    Widgets and Stuff, Inc. Balance Sheet as of December 31, 2019

    Assets:
    Current Assets:
    Cash $_________
    Equity Investments $_________
    Accounts Receivable $_________
    Inventory $_________
    Prepaid Expenses $_________

    Property, Plant, and Equipment:
    Building $_________
    Equipment $_________
    Less: Accumulated Depreciation $_________

    Other Assets:
    Investment in Pearson Company $_________
    Less: Accumulated Equity in Pearson Co. $_________

    Total Assets $_________

    Liabilities and Equity:
    Current Liabilities:
    Accounts Payable $_________
    Notes Payable – Current $40,000
    Mortgage Payable – Current $50,000
    Income Taxes Payable $_________

    Long-term Liabilities:
    Bonds Payable $_________
    Mortgage Payable $_________

    Total Liabilities $_________

    Equity:
    Common Stock $_________
    Additional Paid-in Capital $_________
    Retained Earnings $_________
    Less: Treasury Stock $_________

    Total Equity $_________

    Total Liabilities and Equity $_________

    Statement of Cash Flows:
    Widgets and Stuff, Inc. Statement of Cash Flows for the Year Ended December 31, 2019

    Operating Activities:
    Net Income $_________
    Depreciation Expense $_________
    Increase in Investment Income Revenue $70,000
    Decrease in Accounts Receivable $_________
    Increase in Inventory $_________
    Increase in Prepaid Expenses $_________
    Decrease in Accounts Payable $_________
    Increase in Income Taxes Payable $_________

    Net Cash Provided by Operating Activities $_________

    Investing Activities:
    Proceeds from Sale of Equipment $45,150
    Purchase of Equipment $_________
    Purchase of Building $_________
    Purchase of Equity Investments $_________

    Net Cash Used in Investing Activities $_________

    Financing Activities:
    Redemption of Bonds Payable $_________
    Issuance of Bonds Payable $_________
    Payment of Dividends $250,000

    Net Cash Provided by Financing Activities $_________

    Net Increase in Cash

    $_________

    Cash, Beginning of Year $_________

    Cash, End of Year $_________

    Conclusion
    By generating the multi-step income statement, statement of retained earnings, balance sheet, and statement of cash flows for Widgets and Stuff, Inc. based on the provided information, we can gain valuable insights into the company’s financial performance and position. These statements provide a comprehensive overview of the company’s revenues, expenses, retained earnings, assets, liabilities, and cash flows, allowing stakeholders to make informed decisions and assess the company’s financial health.