Prepare a Set of Financial Statements

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Samson Company adjusted account balances as of December 31, 2005 are as follows (some noted balances are Jan. 1, 2005):

     Sales . . . . . . . . . . . . . . . . . . . . . . . .1,200,000
     Purchases . . . . . . . . . . . . . . . . . . . . . .  810,000
     Marketable securities . . . . . . . . . . . . . . . .   15,000
     Purchase discounts  . . . . . . . . . . . . . . . . .   20,000
     Purchase returns and allowances . . . . . . . . . . .    2,000
     Extraordinary loss due to earthquake, net of
        applicable taxes of $15,000. . . . . . . . . . . .   35,000
     Selling expenses  . . . . . . . . . . . . . . . . . .  114,000
     Cash  . . . . . . . . . . . . . . . . . . . . . . . .   90,000
     Accounts receivable . . . . . . . . . . . . . . . . .   60,000
     Common stock  . . . . . . . . . . . . . . . . . . . .  150,000
     Accumulated depreciation  . . . . . . . . . . . . . .   42,000
     Paid-in-capital in excess of par  . . . . . . . . . .   30,000
     Inventory, January 1, 2005  . . . . . . . . . . . . .  149,000
     Inventory, December 31, 2005  . . . . . . . . . . . .  120,000
     Accounts payable  . . . . . . . . . . . . . . . . . .   71,000
     Salaries payable  . . . . . . . . . . . . . . . . . .    5,000
     Cash surrender value of life insurance  . . . . . . .   22,000
     Patents . . . . . . . . . . . . . . . . . . . . . . .   18,000
     Retained earnings, January 1, 2005  . . . . . . . . .   60,600
     Interest expense  . . . . . . . . . . . . . . . . . .   13,000
     General and administrative expenses . . . . . . . . .  160,000
     Dividend revenue. . . . . . . . . . . . . . . . . . .    6,000
     Allowance for doubtful accounts . . . . . . . . . . .    3,000
     Notes payable (maturity 7/1/07) . . . . . . . . . . .  105,000
     Machinery and equipment . . . . . . . . . . . . . . .  150,000
     Income tax expense  . . . . . . . . . . . . . . . . .   30,600
     Treasury stock  . . . . . . . . . . . . . . . . . . .   10,000
     Dividends declared and paid . . . . . . . . . . . . .   18,000


     Prepare multi-step income statement:

                              Samson Company
                             Income Statement
                     For the Year Ended December 31, 2005

     Sales                                               $1,200,000

     Cost of Goods Sold:

        Beginning inventory                  $149,000
        Purchases                  $810,000
        Purchase discounts         ( 20,000)
        Purchase returns and
           allowances              (  2,000)
                                    -------
        Net purchases                         788,000
                                              -------
        Goods available for sale              937,000
        Ending inventory                      120,000
                                              -------
        Cost of goods sold                                  817,000
                                                          ---------
      Gross profit                                          383,000

      Operating expenses:
         Selling expenses                     114,000
         General and administrative expenses  160,000
                                              -------
         Total operating expenses                           274,000
                                                          ---------
      Operating income                                      109,000

      Other income (expense):
         Dividend revenue                       6,000
         Interest expense                    ( 13,000)
                                              -------
         Total other income (expense)                      (  7,000)
                                                          ---------

      Income before income taxes                            102,000

      Income taxes                                           30,600
                                                          ---------

      Income before extraordinary item                       71,400

      Extraordinary loss due to earthquake,
         net of applicable taxes of $15,000                ( 35,000)

                                                           --------
      Net income                                            $36,400
                                                           ========

      Prepare a Statement of Retained Earnings:

                              Samson Company
                       Statement of Retained Earnings
                     For the Year Ended December 31, 2005

      Retained earnings, January 1, 2005                    $60,600

      Plus net income                                        36,400

      Less dividends                                       ( 18,000)
                                                            -------
      Retained earnings, December 31, 2005                   79,000
                                                            =======

      Prepare a classified Balance Sheet:

                              Samson Company
                               Balance Sheet
                             December 31, 2005


                                    Assets
      Current Assets:
         Cash                                               $ 90,000
         Marketable securities                                15,000
         Accounts receivable                     $ 60,000
         Less allowance for doubtful accounts    (  3,000)
                                                  -------
                                                              57,000
         Inventories                                         120,000
                                                            --------
         Total Current Assets                                282,000

      Property, Plant, and Equipment
         Machinery and Equipment                 $150,000
         Less accumulated depreciation           ( 42,000)
                                                 --------
         Total Property, Plant, and Equipment                108,000

      Other Assets:
         Cash surrender value of life insurance  $ 22,000
         Patents                                   18,000
                                                  -------
         Total Other Assets                                   40,000
                                                             -------
      Total Assets                                          $430,000
                                                            ========

                       Liabilities and Stockholders' Equity
      Liabilities:
         Current Liabilities:
            Accounts payable                                $ 71,000
            Salaries payable                                   5,000
                                                             -------
            Total Current Liabilities                         76,000

         Long-term Liabilities
            Notes payable                                    105,000
                                                             -------
         Total Liabilities                                   181,000

      Stockholders' Equity:
         Common stock                           $150,000
         Paid-in-capital in excess of par         30,000
         Retained earnings                        79,000
         Treasury stock                         ( 10,000)
                                                 -------
         Total Stockholders' Equity                          249,000
                                                             -------
      Total Liabilities and Stockholders' Equity            $430,000
                                                            ========