Reference no: EM131813318

Problem - Preparation of Financial Statements

Braun Company has the following ledger accounts and adjusted balances as of December 31, 2014. All accounts have normal balances. Braun's income tax rate is 40%.

Accounts Payable.................................. 25,000

Accounts Receivable..............................160,000

Accumulated Depreciation-Building............ 50,000

Administrative Expenses......................... 50,000

Bonds Payable (Mature 2020)...................250,000

Building.............................................400,000

Cash................................................. 25,000

Common Stock....................................400,000

Cost of Goods Sold...............................400,000

Dividends.......................................... 20,000

Interest Revenue................................... 20,000

Inventory............................................280,000

Land.................................................200,000

Loss from Earthquake............................. 70,000

(unusual in nature and infrequent in occurrence)

Loss from Sale of Division X........................... 40,000

(Division X is a component of Braun Company)

Loss on Sale of Land............................. ..10,000

Patent................................................ 30,000

Prepaid Rent........................................ 10,000*

Retained Earnings, January 1, 2014............250,000

Sales Revenue.....................................900,000

Selling Expenses..................................100,000

*Two years rent paid in advance for offsite document storage.

Instructions: Use this information to prepare a multiple-step income statement, a retained earnings statement, and a classified balance sheet.