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Date Submitted: 04/23/2011 11:53 AM
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...