Reference no: EM133009643

The balance sheet of Not-too-tough company for December 31, 2019 showed the following account balances (there were no other accounts listed, numbers are in thousands):

Wages payable $6,

Contributed capital $350,

Accounts payable $50,

PP&E (cost) $100,

Inventory $59,

Cash $400,

Advances from customers (i.e., Uneared revenue) $40,

Accumulated depreciation $10,

Accounts receivables $90,

Retained earnings $193.

During 2020 the following transactions occurred:

1. Rent for 18 months, starting January 1, 2020, in the amount of $36, was paid in cash.
2. Sales, all on credit, were $750. Collections from customers were $700.
3. In addition to the transactions described in item 2 above, products were shipped to the customer who paid $40 in advance (see December 31, 2019 balances). The selling price was $100, and the customer will pay the balance in early 2021.
4. The company purchased $500 worth of inventory, on account. Payments on accounts payable were $400.
5. -Based on a physical count, inventory balance as of December 31, 2020 was $85.
6. The employees earned $48 as wages. Cash wage payments to employees were $50.
7. Depreciation for the year equals $10.
8. The Company announced the signing of a sales contract for $1,100 of products to be delivered in 2022. Stock price rose from $9.50 to $10.25 per share.
9. A dividend of $45 was declared during 2020. These dividends will be paid in early 2021.

Required:

Problem a. Prepare an Income Statement for 2020. For simplicity, ignore tax expenses by assming that the tax rate equals zero.

Problem b. Prepare a Balance Sheet for December 31, 2020.