Exercise 2–11 Requirement 1 BLUEBOY CHEESE CORPORATION Income Statement For the Year Ended December 31, 2013 Sales revenue ............................................... Cost of goods sold ....................................... Gross profit .................................................. Operating expenses: Salaries....................................................... Rent ............................................................ Depreciation .............................................. Advertising ............................................... Total operating expenses .............. Operating income ........................................ Other expense: Interest ...................................................... Net income .................................................. 2–22 $800,000 480,000 320,000 $120,000 30,000 60,000 5,000 215,000 105,000 4,000 $101,000 Exercise 2–11 (continued) BLUEBOY CHEESE CORPORATION Balance Sheet At December 31, 2013 Assets Current assets: Cash ........................................................... Accounts receivable .................................. Inventory .................................................... Prepaid rent ............................................... Total current assets .............................. Property and equipment: Equipment ................................................. Less: Accumulated depreciation ............... Total assets ........................................ $ 21,000 300,000 50,000 10,000 381,000 $600,000 (250,000) 350,000 $731,000 Liabilities and Shareholders' Equity Current liabilities: Accounts payable ...................................... Salaries payable ......................................... Interest payable ......................................... Note payable .............................................. Total current liabilities ......................... Shareholders’ equity: Common stock .......................................... Retained earnings ...................................... Total shareholders’ equity ................... Total liabilities and shareholders’ equity $ 60,000 8,000 2,000 60,000 130,000 $400,000 201,000* 601,000 $731,000 *Beginning balance of $100,000 plus net income of $101,000. 2– Solutions Manual, Vol.1, Chapter 2 23 Exercise 2–11 (concluded) Requirement 2 December 31, 2013 Sales revenue ................................................................... 800,000 Income summary ......................................................... 800,000 Income summary ............................................................. 699,000 Cost of goods sold ....................................................... 480,000 Salaries expense .......................................................... 120,000 Rent expense ............................................................... 30,000 Depreciation expense .................................................. 60,000 Interest expense ........................................................... 4,000 Advertising expense .................................................... 5,000 Income summary ($800,000 – 699,000) .............................. 101,000 Retained earnings ........................................................ 101,000 2–24