PROBLEM I

Wang Corporation's capital structure consists of 50,000 ordinary shares. At December 31, 2011 an
analysis of the accounts and discussions with company officials revealed the following information:

Sales 1,100,000
Purchase discounts 18,000
Purchases 642,000
Loss on discontinued operations (net of tax) 42,000
Selling expenses 128,000
Cash 60,000
Accounts receivable 90,000
Share capital 200,000
Accumulated depreciation 180,000
Dividend revenue 8,000
Inventory, January 1, 2011 152,000
Inventory, December 31, 2011 125,000
Unearned service revenue 4,400
Accrued interest payable 1,000
Land 370,000
Patents 100,000
Retained earnings, January 1, 2011 290,000
Interest expense 17,000
General and administrative expenses 150,000
Dividends declared 29,000
Allowance for doubtful accounts 5,000
Notes payable (maturity 7/1/14) 200,000
Machinery and equipment 450,000
Materials and supplies 40,000
Accounts payable 60,000

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

Instructions
(a) Prepare an income statement.
(b) Prepare a retained earnings statement.

PROBLEM II

Given the following account information for Leong Corporation, prepare a statement of financial
position in report form for the company as of December 31, 2012. All accounts have normal
balances.

Equipment 40,000
Interest Expense 2,400
Interest Payable 600
Retained Earnings ?
Dividends 50,400
Land 137,320
Inventory 102,000
Bonds Payable 78,000
Notes Payable (due in 6 months) 14,400
Share capitalordinary 60,000
Accumulated Depreciation - Eq. 10,000
Prepaid Advertising 5,000
Revenue 331,400
Buildings 80,400
Supplies 1,860
Taxes Payable 3,000
Utilities Expense 1,320
Advertising Expense 1,560
Salary Expense 53,040
Salaries Payable 900
Accumulated Depr. - Bld. 15,000
Cash 30,000
Depreciation Expense,
Building & Equipment 8,000