Advanced Financial Accounting - II - Preston University

Cleveland Company had available at the end of 2007 the information as follows:CLEVELAND COMPANYComparative Balance SheetAs of December 31,2007 and 20082007 2008Cash $ 15,000 $ 4,000Accounts receivable 17,500 12,950Short-term investments 20,000 30,000Inventory 42,000 35,000Prepaid rent 3,000 12,000Prepaid Insurance 2,100 900Office supplies 1,000 750Land 125,000 175,000Building 350,000 350,000Accumulated depreciation (105,000) (87,500)Equipment 525,000 400,000Accumulated depreciation (130,000) (112,000)Patent ; 45,000 50,000Total Assets ! . $910,600 $ 871,100Accounts payable $ 27,000 $ 32,000Taxes payable i 5,000 4,000Wages payable 5,000 3,000Short-term notes payable ( 10,000 10,000Long-term notes payable f 60,000 70,000Bonds payable 400,000 400,000Premium on bonds payable 20,303 25,853Common stock 240,000 220,000Paid-in-capital in excess of par 20,000 17,500Retained earnings 123,297 88,747Total liabilities and stockholders' equity $910,600 $871,100CLEVELAND COMPANY•• Income StatementFor the Year ended December 31, 2007Sales revenue $1,160,0.00Cost of goods sold (748,000)412,000Gross margin ' (|Operating expensesSelling expenses $ 79,200Administrative expense? 156,700Depreciation / Amortization expense 40,500Total operating expenses (276,400)Income from operations ' 135,600Other revenues/expenses >Gain on sale of land ! 8,000Gain on sale of short-term investment 4,000Dividend revenue 2,400Interest expense (51,750) (37,350)Income before taxes 98,250Income tax expense (39,400)Net Income 58,850Dividends to common stockholders . ' (24,300)To retained earnings $ 34,550