The adjusted trial balance of Cavamanlis Co. as of December 31, 2010, contains the following. CAVAMANLIS CO.

Adjusted Trial Balance December 31, 2010 Account Titles Cash Accounts Receivable Prepaid Rent Equipment Accumulated Depreciation Notes Payable Accounts Payable Common Stock Retained Earnings Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense Interest Expense Interest Payable Debit $19,989 7,937 3,297 19,067 Credit

4,017 7,857 2,669 236 174

$5,912 6,717 5,489 21,017 12,327 13,607

174 $65,243 $65,243 Prepare an income statement. (List multiple entries from largest to smallest amount, e.g. 10, 5, (a) 2.) CAVAMANLIS CO. Income Statement For the Year Ended December 31, 2010 Revenues Service revenue 13607 $ Expenses Salaries expense
Rent expense Depreciation expense Interest expense

7857 2669 236 174 10936

Net Income (b) Prepare a statement of retained earnings. CAVAMANLIS CO. Statement of Retained Earnings For the Year Ended December 31, 2010
Retained earnings, January 1, 2010

2671

12327 2671 14998

Add:

Net income

Less:

Dividends

4017

10981 $ (c) Prepare a classified balance sheet. (List assets in order of liquidity and liabilities in order from largest to smallest amounts, e.g. 15, 11, 7.) CAVAMANLIS CO. Balance Sheet December 31, 2010 Retained earnings, December 31, 2010

Assets Current Assets

Cash Accounts receivable Prepaid rent

19989 7937 3297 31223

Total current assets Property, plant, and equipment

Equipment 19067 5912

Less: Total assets

Accumulated depreciation

13155

44378

Liabilities and Stockholders' Equity Current liabilities

Notes payable Accounts payable Interest payable

6717 5489 174 12380

Total current liabilities Stockholders' equity Common stock

Retained earnings 21017 10981

31998

Total liabilities and stockholders' equity

44378

Presented below is information related to Dickinson Company for 2010. Retained earnings balance, January 1, 2010 Sales for the year Cost of goods sold Interest revenue Selling and administrative expenses Write-off of goodwill (not tax deductible) Income taxes for 2010 Gain on the sale of investments (normal recurring) Loss due to flood damageextraordinary item (net of tax) Loss on the disposition of the wholesale division (net of tax) Loss on operations of the wholesale division (net of tax) Dividends declared on common stock Dividends declared on preferred stock $995,700 26,425,000 16,195,000 77,600 4,734,200 837,600 966,140 112,500 397,500 445,900 93,000 253,200 81,200

Prepare a multiple-step income statement and a retained earnings statement. Dickinson Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, Dickinson sold the wholesale operations to Rogers Company. During 2010, there were 500,000 shares of common stock outstanding all year. (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 5.25 and all other answers to 0 decimal places, e.g. 2.250. For earnings per share use either a negative sign preceding the number, e.g. 0.45 or parenthesis, e.g. (0.45) for negative numbers. Enter all other amounts as positive amounts and subtract where necessary.)

DICKINSON COMPANY Income Statement For the Year Ended December 31, 2010
Sales Cost of goods sold

26425000 16195000 10230000 4734200 5495800

Gross Profit
Selling & administrative expenses

Income from operations Other revenues and gains

Gain on the sale of investments

112500

Interest revenue

77600

190100

Other expenses and losses

Write-off goodw ill 837600 4848300 966140 3882160

Income from continuing operations before income tax

Income tax

Income from continuing operations Discontinued operations

Loss on disposal, net of tax 445900 93000

Loss of operations, net of tax

538900 3343260 397500

Income before extraordinary item

Extraordinary item, loss from flood damage, net of tax

Net income Earnings per share: Income from continuing operations Discontinued operations Loss on disposal, net of tax Loss on operations, net of tax Income before extraordinary item
Extraordinary loss, net of tax -0.89 -0.19

2945760

7.60

-1.08 6.52 -0.80

Net income

$ DICKINSON COMPANY Retained Earnings Statement For the Year Ended December 31, 2010 $

5.72

Retained earnings, January 1

995700 2945760

Add:

Net income

3941460

Less:

Dividends Common Stock Preferred stock

253200 81200 334400

Retained earnings, December 31

3607060

(Adjusting and Reversing Entries) When the accounts of Constantine Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period. 1. 2. 3. 4. The prepaid insurance account shows a debit of $6,480, representing the cost of a 2-year fire insurance policy dated August 1 of the current year. On November 1, Rental Revenue was credited for $3,240, representing revenue from a subrental for a 3-month period beginning on that date. Purchase of advertising materials for $880 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of $337 are on hand. Interest of $837 has accrued on notes payable.

Prepare in general journal form: (a) the adjusting entry for each item and (b) the reversing entry for each item where appropriate. (If no journal entry is required, please choose No entry as the description and put 0 as the amount.) (a) Adjusting Entries: Description/Account 1.
Insurance Expense Prepaid Insurance 1350 1350 1080 1080 337 337 837 837

Debit

Credit

2.

Rental Revenue Unearned Rental Revenue

3.

Advertising Materials Advertising Expense

4.

Interest Expense Interest Payable

(b) Reversing Entries: Description/Account 1.

No entry No entry 0

Debit

Credit

0 1080 1080 337

2.

Unearned Rental Revenue Rental Revenue

3.

Advertising Expense

Advertising Materials

337 837 837

4.

Interest Payable Interest Expense