Accounting

P5-3A

(a) MAINE DEPARTMENT STORE

Income Statement

For the Year Ended December 31, 2008

Sales revenues

Sales $628,000

Less: Sales returns and

  allowances 8,000

Net sales  620,000

Cost of goods sold 412,700

Gross profit  207,300

Operating expenses

Selling expenses

Sales salaries expense $76,000

Sales commissions expense  14,500

Depr. expense—equipment  13,300

Utilities expense

  ($12,000 X 60%)   7,200

Insurance expense

  ($7,200 X 60%) 4,320

Total selling expenses $115,320

Administrative expenses

Office salaries expense  32,000

Depr. expense—building  10,400

Property tax expense   4,800

Utilities expense

  ($12,000 X 40%)   4,800

Insurance expense

  ($7,200 X 40%) 2,880

Total administrative

  expenses 54,880

Total operating

  expenses 170,200

Income from operations   37,100

Other revenues and gains

Interest revenue    4,000

Other expenses and losses

Interest expense 11,000 7,000

Net income $ 30,100

MAINE DEPARTMENT STORE

Retained Earnings Statement

For the Year Ended December 31, 2008

Retained earnings, January 1 $60,000

Add: Net income 30,100

 90,100

Less: Dividends 28,000

Retained earnings, December 31 $62,100

MAINE DEPARTMENT STORE

Balance Sheet

December 31, 2008

Assets

Current assets

Cash $ 23,800

Accounts receivable   50,300

Merchandise inventory   75,000

Prepaid insurance 2,400

Total current assets $151,500

Property, plant, and equipment

Building $190,000

Less: Accumulated depreciation—

  building 52,500 137,500

Equipment  110,000

Less: Accumulated depreciation—

  equipment 42,900 67,100 204,600

Total assets $356,100

MAINE DEPARTMENT STORE

Balance Sheet (Continued)

December 31, 2008

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable $ 79,300...