70.2K

Verified Solution

Link Copied!

Wang Corporation's capital structure consists of 50,000 ordinaryshares. At December 31, 2011 an analysis of the accounts anddiscussions with company officials revealed the followinginformation:

           Sales                                                                                                      ¥1,100,000

           Purchasediscounts                                                                                       18,000

           Purchases                                                                                                    642,000

           Loss on discontinued operations (net oftax)                                               42,000

           Sellingexpenses                                                                                         128,000

           Cash                                                                                                              60,000

           Accountsreceivable                                                                                     90,000

           Sharecapital                                                                                               200,000

           Accumulateddepreciation                                                                         180,000

           Dividendrevenue                                                                                           8,000

           Inventory, January 1,2011                                                                         152,000

           Inventory, December 31,2011                                                                   125,000

           Unearned servicerevenue                                                                              4,400

           Accrued interestpayable                                                                                1,000

           Land                                                                                                           370,000

           Patents                                                                                                        100,000

           Retained earnings, January 1,2011                                                           290,000

           Interestexpense                                                                                            17,000

           General and administrativeexpenses                                                         150,000

           Dividendsdeclared                                                                                       29,000

           Allowance for doubtfulaccounts                                                                   5,000

           Notes payable (maturity7/1/14)                                                                200,000

           Machinery andequipment                                                                          450,000

           Materials andsupplies                                                                                  40,000

           Accountspayable                                                                                         60,000

The amount of income taxes applicable to ordinary income was¥48,600, excluding the tax effect of the discontinued operationsloss, which amounted to ¥18,000.

Instructions

(a) Prepare an income statement.

(b)       Prepare a retainedearnings statement.