Transactions during 2020 follow:Borrowed $20,000 cash on July 1, 2020, signing a one-year, 10 percent note payable.Purchased equipment for $18,000 cash on July 1, 2020.Sold 10,000 additional shares of capital stock for cash at $0.50 market value per share at the beginning of the year.Earned $70,000 in revenues for 2020, including $14,000 on credit and the rest in cash.Incurred $27,000 in wages expense and $8,000 in miscellaneous expenses for 2020, with $7,000 on credit and the rest paid with cash. Note: Wages are paid in cash.Purchased additional small tools, $3,000 cash.Collected accounts receivable, $8,000.Paid accounts payable, $11,000.Purchased $10,000 of supplies on account.Received a $3,000 deposit on work to start January 15, 2021.Declared a cash dividend on December 1, $10,000; paid on December 31. Data for adjusting entries:Supplies of $4,000 and small tools of $8,000 were counted on December 31, 2020 (debit Miscellaneous Expenses).Depreciation for 2020, $2,000.Interest accrued on notes payable (to be computed).Wages earned since the December 24 payroll but not yet paid, $3,000.Income tax expense was $4,000, payable in 2021. Aubrae and Tylor Williamson began operations of their furniture repair shop (Furniture Refinishers, Inc.) on January 1, 2019.The annual reporting period ends December 31. The trial balance on January 1, 2020, was as follows:Furniture Refinishers, Inc.Trial Balance on January 1, 2020Account TitlesDebitCreditCash5,0004,0002,0006,000Accounts receivableSuppliesSmall toolsEquipmentAccumulated depreciation (on equipment)Other assets (not detailed to simplify)Accounts payableDividends payableNotes payable9,0007,000Wages payableInterest payableIncome taxes payableUnearned revenueCommon stock (60,000 shares, $0.10 par value)Additional paid-in capitalRetained earnings6,0009,0004,000Service revenueDepreciation expenseWages expenseInterest expenseIncome tax expenseMiscellaneous expensesTotals26,00026,000 Prepare an income statement (including earnings per share). (Round "Earnings per share" to 2 decimal places.)FURNITURE REFINISHERS, INC.Income StatementFor the Year Ended December 31, 2020Operating revenues:Service revenue$70,000Operating expenses:Depreciation expense2,000Wages expense30,000Miscellaneous expenses17,000Total operating expenses49,000Operating income21,000Other item:Interest expense1,000Pretax income20,000Income tax expense4,000Net income$16,000Earnings per share$0.22

Financial Statement - Financial Statements includes Income Statement, Statement of Stockholder's…

Answered: Transactions during 2020 follow:…

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter3: The Adjusting Process

Section: Chapter Questions

Problem 5PB: Reece Financial Services Co., which specializes in appliance repair services, is owned and operated...

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Transactions during 2020 follow:

Borrowed $20,000 cash on July 1, 2020, signing a one-year, 10 percent note payable.
Purchased equipment for $18,000 cash on July 1, 2020.
Sold 10,000 additional shares of capital stock for cash at $0.50 market value per share at the beginning of the year.
Earned $70,000 in revenues for 2020, including $14,000 on credit and the rest in cash.
Incurred $27,000 in wages expense and $8,000 in miscellaneous expenses for 2020, with $7,000 on credit and the rest paid with cash. Note: Wages are paid in cash.
Purchased additional small tools, $3,000 cash.
Collected accounts receivable, $8,000.
Paid accounts payable, $11,000.
Purchased $10,000 of supplies on account.
Received a $3,000 deposit on work to start January 15, 2021.
Declared a cash dividend on December 1, $10,000; paid on December 31.

Data for adjusting entries:

Supplies of $4,000 and small tools of $8,000 were counted on December 31, 2020 (debit Miscellaneous Expenses).
Depreciation for 2020, $2,000.
Interest accrued on notes payable (to be computed).
Wages earned since the December 24 payroll but not yet paid, $3,000.
Income tax expense was $4,000, payable in 2021.

Aubrae and Tylor Williamson began operations of their furniture repair shop (Furniture Refinishers, Inc.) on January 1, 2019.
The annual reporting period ends December 31. The trial balance on January 1, 2020, was as follows:
Furniture Refinishers, Inc.
Trial Balance on January 1, 2020
Account Titles
Debit
Credit
Cash
5,000
4,000
2,000
6,000
Accounts receivable
Supplies
Small tools
Equipment
Accumulated depreciation (on equipment)
Other assets (not detailed to simplify)
Accounts payable
Dividends payable
Notes payable
9,000
7,000
Wages payable
Interest payable
Income taxes payable
Unearned revenue
Common stock (60,000 shares, $0.10 par value)
Additional paid-in capital
Retained earnings
6,000
9,000
4,000
Service revenue
Depreciation expense
Wages expense
Interest expense
Income tax expense
Miscellaneous expenses
Totals
26,000
26,000

Prepare an income statement (including earnings per share). (Round "Earnings per share" to 2 decimal places.)
FURNITURE REFINISHERS, INC.
Income Statement
For the Year Ended December 31, 2020
Operating revenues:
Service revenue
$
70,000
Operating expenses:
Depreciation expense
2,000
Wages expense
30,000
Miscellaneous expenses
17,000
Total operating expenses
49,000
Operating income
21,000
Other item:
Interest expense
1,000
Pretax income
20,000
Income tax expense
4,000
Net income
$
16,000
Earnings per share
$
0.22

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