Question

Selected transactions completed by Equinox Products Inc. duringthe fiscal year ended December 31, 2016, were as follows:

Record on journal page 10:

Jan.	3	Issued 15,000 shares of $20 parcommon stock at $30, receiving cash.
Feb.	15	Issued 4,000 shares of $80 parpreferred 5% stock at $100, receiving cash.
May	1	Issued $500,000 of 10-year, 5%bonds at 104, with interest payable semiannually.
	16	Declared a dividend of $0.50 pershare on common stock and $1.00 per share on preferred stock. Onthe date of record, 100,000 shares of common stock wereoutstanding, no treasury shares were held, and 20,000 shares ofpreferred stock were outstanding. Journalize this transactionas a single entry.
	26	Paid the cash dividends declared onMay 16.
Jun.	1	Purchased 7,500 shares of SolsticeCorp. at $40 per share, plus a $150 brokerage commission. Theinvestment is classified as an available-for-sale investment.
	8	Purchased 8,000 shares of treasurycommon stock at $33 per share.
	22	Purchased 40,000 shares ofPinkberry Co. stock directly from the founders for $24 per share.Pinkberry has 125,000 shares issued and outstanding. EquinoxProducts Inc. treated the investment as an equity methodinvestment.
	30	Declared a $1.00 cash dividend pershare on preferred stock. On the date of record, 20,000 shares ofpreferred stock were outstanding.
Jul.	11	Paid the cash dividends declared onJul. 11 to the preferred stockholders.
Aug.	27	Received $27,500 dividend fromPinkberry Co. investment of Jun. 22.

Record on journal page 11:

Oct.	1	Purchased $90,000 of Dream Inc.10-year, 5% bonds, directly from the issuing company, at their faceamount plus accrued interest of $375. The bonds are classified as aheld-to-maturity long-term investment.
	7	Sold, at $38 per share, 2,600shares of treasury common stock purchased on Jun. 8.
	14	Received a dividend of $0.60 pershare from the Solstice Corp. investment on Jun. 1.
	29	Sold 1,000 shares of Solstice Corp.at $45, including commission.
	31	Recorded the payment of semiannualinterest on the bonds issued on May 1 and the amortization of thepremium for six months. The amortization is determined using thestraight-line method.
Dec.	31	Accrued interest for three monthson the Dream Inc. bonds purchased on Oct. 1.
	31	Pinkberry Co. recorded totalearnings of $240,000. Equinox Products recorded equity earnings forits share of Pinkberry Co. net income.
	31	The fair value for Solstice Corp.stock was $39.02 per share on December 31, 2016. The investment isadjusted to fair value, using a valuation allowance account. AssumeValuation Allowance for Available-for-Sale Investments had abeginning balance of zero.

Required:

1.

Journalize the selectedtransactions. Refer to the Chart of Accounts for exact wording ofaccount titles.

2.

After all of the transactionsfor the year ended December 31, 2016, had been posted [includingthe transactions recorded in part (1) and all adjusting entries],the data that follows were taken from the records of EquinoxProducts Inc.

A.

Prepare a multiple-step incomestatement for the year ended December 31, 2016, concluding withearnings per share. In computing earnings per share, assume thatthe average number of common shares outstanding was 100,000 andpreferred dividends were $100,000. (Round earnings per share to thenearest cent.)*

B.

Prepare a retained earningsstatement for the year ended December 31, 2016.*

C.

Prepare a balance sheet inreport form as of December 31, 2016. *

*	Read the instructions aboveeach financial statement carefully. They may contain specificinstructions for completing the statement.

Income Statementdata:
Advertising expense	$150,000
Cost of merchandise sold	3,700,000
Delivery expense	30,000
Depreciation expense-officebuildings and equipment	30,000
Depreciation expense-storebuildings and equipment	100,000
Dividend revenue	4,500
Gain on sale of investments	4,980
Income from Pinkberry Co.investment	76,800
Income tax expense	140,500
Interest expense	21,000
Interest revenue	2,720
Miscellaneous administrativeexpense	7,500
Miscellaneous selling expense	14,000
Office rent expense	50,000
Office salaries expense	170,000
Office supplies expense	10,000
Sales	5,254,000
Sales commissions	185,000
Sales salaries expense	385,000
Store supplies expense	21,000

Retainedearnings and balance sheet data:
Accounts payable	$194,300
Accounts receivable	545,000
Accumulated depreciation—officebuildings and equipment	1,580,000
Accumulated depreciation—storebuildings and equipment	4,126,000
Allowance for doubtfulaccounts	8,450
Available-for-sale investments (atcost)	260,130
Bonds payable, 5%, due 2024	500,000
Cash	246,000
Common stock, $20 par
(400,000 shares authorized; 100,000shares issued, 94,600 outstanding)	2,000,000
Dividends:
Cash dividends for commonstock	155,120
Cash dividends for preferredstock	100,000
Goodwill	500,000
Income tax payable	44,000
Interest receivable	1,125
Investment in Pinkberry Co. stock(equity method)	1,009,300
Investment in Dream Inc. bonds(long term)	90,000
Merchandise inventory (December 31,2016),
at lower of cost (FIFO) ormarket	778,000
Office buildings and equipment	4,320,000
Paid-in capital from sale oftreasury stock	13,000
Excess of issue price overpar:
-Common	886,800
-Preferred	150,000
Preferred 5% stock, $80 par
(30,000 shares authorized; 20,000shares issued)	1,600,000
Premium on bonds payable	19,000
Prepaid expenses	27,400
Retained earnings, January 1,2016	9,319,725
Store buildings and equipment	12,560,000
Treasury stock
(5,400 shares of common stock atcost of $33 per share)	178,200
Unrealized gain (loss) onavailable-for-sale investments	(6,500)
Valuation allowance foravailable-for-sale investments	(6,500)

CHART OF ACCOUNTSEquinox Products Inc.General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
122	Allowance for DoubtfulAccounts
131	Merchandise Inventory
132	Interest Receivable
133	Prepaid Expenses
141	Investments-Solstice Corp.
142	Investment in Pinkberry Co.Stock
143	Investment in Dream Inc. Bonds
144	Valuation Allowance forAvailable-for-Sale Investments
181	Store Buildings and Equipment
182	Accumulated Depreciation-StoreBuildings and Equipment
183	Office Buildings and Equipment
184	Accumulated Depreciation-OfficeBuildings and Equipment
191	Goodwill

	LIABILITIES
211	Accounts Payable
221	Income Tax Payable
225	Cash Dividends Payable
251	Bonds Payable
252	Discount on Bonds Payable
253	Premium on Bonds Payable

	EQUITY
311	Preferred Stock
312	Paid-in Capital in Excess ofPar-Preferred Stock
321	Common Stock
322	Paid-in Capital in Excess ofPar-Common Stock
331	Retained Earnings
341	Cash Dividends
351	Treasury Stock
352	Paid-in Capital from Sale ofTreasury Stock
361	Unrealized Gain (Loss) onAvailable-for-Sale Investments

	REVENUE
410	Sales
611	Dividend Revenue
621	Interest Revenue
631	Income from Pinkberry Co.
641	Gain on Sale of Investments

	EXPENSES
511	Cost of Merchandise Sold
512	Bad Debt Expense
520	Sales Salaries Expense
521	Sales Commissions
522	Office Salaries Expense
531	Advertising Expense
532	Delivery Expense
537	Store Supplies Expense
538	Office Supplies Expense
539	Office Rent Expense
541	Income Tax Expense
551	Depreciation Expense-StoreEquipment
552	Depreciation Expense-OfficeEquipment
591	Miscellaneous Selling Expense
592	Miscellaneous AdministrativeExpense
710	Interest Expense
731	Loss on Sale of Investments

Labels
Current assets
Current liabilities
December 31, 2016
For the Year Ended December 31,2016
Intangible assets
Investments
Less dividends
Long-term liabilities
Operating expenses
Other income and expenses
Paid-in capital
Add dividends
Property, plant, and equipment
AmountDescriptions
Available-for-sale investments
Decrease in retained earnings
Excess of issue price over par
Gross profit
Income before income tax
Income from operations
Increase in retained earnings
Miscellaneous selling expense
Net income
Net loss
Retained earnings, January 1,2016
Retained earnings, December 31,2016
Sales commissions
Sales salaries expense
Store supplies expense
Total administrative expenses
Total assets
Total (before treasury stock)
Total current assets
Total current liabilities
Total liabilities
Total liabilities and stockholders’equity
Total long-term liabilities
Total investments
Total operating expenses
Total paid-in capital
Total property, plant, andequipment
Total selling expenses
Total stockholders’ equity
Unamortized premium
Unamortized discount