55 CHAPTER 8 DAILY MENU - OPTION 3 WHAT OPTION 3 IS USED FOR. DAILY Option 3 is used for printing: . An Income Statement, with or without footnote disclosures, . A Balance Sheet, with or without footnote disclosures, and . An analysis of the Income Statement and the Balance Sheet. Refer to Chapter 2 for an explanation of the standard messages and reminders that are part of Option 3. After the standard messages and reminders, Option 3 asks for: . The beginning and ending dates for your financial statements. . The value of the ending merchandise inventory. . Information about primary and contra accounts. The Income Statement is printed first, followed by the Balance Sheet. After both statements have been printed, Option 3 analyzes the reported financial data and prints the analysis for your study. OPTION 3 SEQUENCE OF EXECUTION AND AN ILLUSTRATION. After the standard messages and reminders, Option 3 begins by requesting that you enter two dates and the value of ending inventory. The requests and the assumed input ("010184", "123184", and "112250.00") are: ENTER THE BEGINNING DATE FOR THE INCOME STATEMENT. (USE FORMAT MMDDYY. I.E., JUNE 30,1984 = 063084.) 010184 ENTER THE ENDING DATE FOR THE INCOME STATEMENT. (USE FORMAT MMDDYY. I.E., DECEMBER 31,1984 = 123184.) 123184 ENTER VALUE OF ENDING INVENTORY. 112250.00 The illustration that follows is for the Income Statement. Option 3 processing for the Balance Sheet is the same, except for the name of the financial statement, account titles, and account numbers. 56 After you enter the two dates and the inventory value (above), Option 3 continues with: THE PURPOSE OF THESE INSTRUCTIONS IS TO EXPLAIN THE MEANING OF 'PRIMARY' AND 'CONTRA' ACCOUNTS. YOU SHOULD UNDERSTAND THESE INSTRUCTIONS BEFORE YOU CONTINUE. A 'CONTRA' ACCOUNT IS AN ACCOUNT WHOSE BALANCE IS SHOWN ON THE INCOME STATEMENT AS EITHER AN ADDITION TO OR A SUBTRACTION FROM ANOTHER ACCOUNT. FOR EXAMPLE, THE BALANCE OF THE ACCOUNT 'PURCHASE RETURNS AND ALLOWANCES' IS SHOWN ON THE INCOME STATEMENT AS A SUBTRACTION FROM THE ACCOUNT 'PURCHASES'. 'PURCHASE RETURNS AND ALLOWANCES' IS THE ***CONTRA*** ACCOUNT AND 'PURCHASES' IS THE ***PRIMARY*** ACCOUNT. IT IS IMPORTANT THAT YOU UNDERSTAND THE MEANING OF 'PRIMARY' AND 'CONTRA' ACCOUNTS' BEFORE YOU CONTINUE. YOU CAN IDENTIFY 'PRIMARY' AND 'CONTRA' ACCOUNTS, AS WELL AS THEIR ACCOUNT NUMBERS, FROM A TRIAL BALANCE OR A LISTING OF ACTIVE ACCOUNTS. IN THE QUESTIONS THAT FOLLOW AFTER THESE INSTRUCTIONS, YOU WILL BE ASKED TO ENTER THE ACCOUNT NUMBERS OF PRIMARY AND CONTRA ACCOUNTS. PRESS ANY KEY TO CONTINUE. After you press a key, the following appears on your computer screen: DOES THE INCOME STATEMENT CONTAIN ANY CONTRA ACCOUNTS? ENTER 'Y' FOR 'YES' OR 'N' FOR 'NO'. _ If you answer 'N', Option 2 prints the Income Statement. If you answer 'Y', the following appears on your computer screen: ENTER THE QUANTITY OF *** PRIMARY *** ACCOUNTS THAT HAVE CONTRA ACCOUNTS. YOU SHOULD DETERMINE THIS QUANTITY BY REVIEWING A CURRENT TRIAL BALANCE OR A LISTING OF ACTIVE ACCOUNTS. ENTER THE QUANTITY OF PRIMARY ACCOUNTS NOW. IF YOU HAVE MADE A MISTAKE AND WISH TO INDICATE THAT THERE ARE NO PRIMARY ACCOUNTS WITH CONTRA ACCOUNTS, ENTER A ZERO (0). _ If you enter a zero, Option 3 starts printing the Income Statement. If you enter one or another number up through 20 (there is a limit of 20 primary accounts), Option 3: 57 . Displays instructions on how you should proceed. . Asks for pertinent information that pertains to each primary and contra account. An example follows, assuming one primary and one contra account. The primary account is Sales (account number 171), and the contra account is Sales Returns and Allowances (account number 175). ENTER THE PRIMARY AND CONTRA ACCOUNT NUMBERS BELOW. PAY ATTENTION TO THE TYPE OF INPUT THAT IS REQUESTED. WORK FROM A CURRENT TRIAL BALANCE. THE INPUT THAT YOU MAKE (BELOW) WILL BE DISPLAYED (LATER) FOR YOUR REVIEW AND APPROVAL OR DISAPPROVAL. IF YOU DISAPPROVE THE INPUT, YOU WILL BE ASKED TO REENTER ALL OF THE DATA - STARTING AT THE POINT WHERE THE COMPUTER ASKS IF THERE ARE ANY PRIMARY AND CONTRA ACCOUNTS TO BE CONSIDERED. THUS, IF YOU REJECT YOUR INPUT, IT WILL BE COMPLETELY ERASED FROM THE COMPUTER'S MEMORY AND YOU WILL BE GIVEN A FRESH START. ENTER THE ACCOUNT NUMBER FOR *** PRIMARY *** ACCOUNT 1. 171 ENTER THE ACCOUNT NUMBER FOR *** CONTRA *** ACCOUNT 1. 175 ENTER THE QUANTITY OF CONTRA ACCTS. FOR THE ABOVE PRIMARY ACCT. (LIMIT 2) 1 The sequence followed by Option 3 in asking for the above data is: . First, you are asked to enter the account number for the primary account. (See the first input line.) . Next, you are asked to enter the quantity of contra accounts. Note that there is a limit of two contra accounts for each primary account. (See the third input line.) . Finally, you are asked for the account numbers of up to two contra accounts, depending on your input on the third input line. (See the second input line.) This process is repeated for each primary account that has an offsetting contra account. After your entries are complete, the following will appear on the computer screen: 58 YOUR INPUT WILL BE DISPLAYED FOR YOUR REVIEW. ACCOUNT NUMBERS, AS WELL AS ACCOUNT TITLES WILL BE DISPLAYED. IT IS VERY IMPORTANT THAT THE INPUT BE ABSOLUTELY CORRECT BEFORE THE PROGRAM USES IT TO PREPARE THE INCOME STATEMENT. OTHERWISE, THE STATEMENT MAY BE INCORRECTLY PREPARED. SO, REVIEW THE DATA V-E-R-Y CAREFULLY AND NOTE ANY ERRORS. TO THE LEFT ON THE SCREEN WILL BE ONE PRIMARY ACCOUNT, WITH THE RELATED CONTRA ACCOUNT(S) TO THE RIGHT. STUDY THE DISPLAYED DATA VERY C-A-R-E-F-U-L-L-Y AND NOTE ANY INPUT ERRORS. STUDY THE ACCOUNT TITLES, AS WELL AS THE ACCOUNT NUMBERS. IT IS EXTREMELY IMPORTANT THAT YOUR INPUT FOR THE PRIMARY AND CONTRA ACCOUNTS BE ABSOLUTELY CORRECT. AFTER YOU FINISH YOUR REVIEW, YOU WILL BE ASKED TO INDICATE WHETHER YOUR INPUT WAS OR WAS NOT CORRECT. IF YOU INDICATE THAT YOUR INPUT WAS INCORRECT, THE COMPUTER WILL ASK YOU TO REENTER YOUR DATA, FROM THE BEGINNING. PRESS ANY KEY TO CONTINUE. After you press a key to continue, the following will appear on your screen: (Refer to the previously entered account number 175 (Sales Returns and Allowances) as a contra account to primary account number 171 (Sales). These entries were made, above, when Option 3 asked for the account numbers of primary and contra accounts.) YOUR INPUT (WITH ACCOUNT TITLES) IS DISPLAYED BELOW. CAREFULLY REVIEW THE INPUT AND NOTE ANY ERRORS. ONE PRIMARY ACCOUNT, WITH THE ACCOUNT NUMBER AND TITLE, IS ON THE SCREEN TO THE LEFT. THE RELATED CONTRA ACCOUNT(S), WITH ACCOUNT NUMBER(S) AND TITLE(S), IS ON THE SCREEN TO THE RIGHT. CONSIDER IT TO BE AN INPUT ERROR IF ACCOUNT NUMBERS DO NOT CORRESPOND TO THE ACCOUNT TITLES. ALSO CONSIDER IT TO BE AN INPUT ERROR IF THE DISPLAYED CONTRA ACCOUNT(S) DO NOT RELATE TO THE DISPLAYED PRIMARY ACCOUNT. (IF ALL OF YOUR ACCOUNT NUMBERS ARE NOT SHOWN BELOW, THEY WILL APPEAR WHEN YOU PRESS A KEY TO CONTINUE.) ****** PRIMARY ACCOUNT ****** ****** CONTRA ACCOUNT ****** ACCT. ACCT. NBR. ACCOUNT TITLE NBR. ACCOUNT TITLE 171 SALES 175 SALES RETURNS & ALLOWANCES DISPLAY IS COMPLETE. PRESS ANY KEY TO CONTINUE. 59 After you press a key, the following appears on you screen: WERE ALL PRIMARY / CONTRA ACCOUNTS CORRECT AS DISPLAYED? (IF YOU INDICATE THAT THEY WERE N-O-T CORRECT, YOU WILL BE ASKED TO ENTER THE DATA AGAIN.) ENTER 'Y' FOR 'YES' OR 'N' FOR 'NO'. _ If your answer is 'N', Option 3 will ask you reenter all of your input about the primary and contra accounts, beginning with the question "DOES THE INCOME STATEMENT INCLUDE ANY CONTRA ACCOUNTS?". If your answer is 'Y', Option 3 prints the Income Statement. ERROR MESSAGES. Like all CPA-LEDGER options, Option 3 monitors your input to help ensure that you do not make a mistake. In some cases, the system will merely beep at you to signal that it did not accept your input. The beeps are reserved for those cases where additional explanations are not needed. An example is where you enter a date in the incorrect format - perhaps you enter 20 for the month. In these cases, instructions for correct input are already displayed on the screen. In other cases, however, you will need a more detailed explanation. The following is a summary of the error messages that you may encounter. INACCURATE ENTRY FOR THE BEGINNING OR ENDING FINANCIAL STATEMENT DATES. In this case you will hear a beep, indicating that you should reenter the date. INACCURATE ENTRY FOR THE ENDING INVENTORY. If you enter anything except zeros through nines and a decimal point to separate dollars and cents, the system will beep at you and the following message will appear below your input: ENTRY IS INCORRECT. TRY AGAIN. PRESS ANY KEY TO CONTINUE. After pressing a key, you will be asked to reenter the ending inventory value. 60 INACCURATE ENTRY FOR PRIMARY OR CONTRA ACCOUNT NUMBERS. An incorrect entry for primary or contra account numbers may fall into several areas. They are: . You might not enter a numeric value - ZZ for example. In this case, Option 1 beeps and requests that you reenter your input. . You might enter an account number that is not on the financial statement that is about to be printed. In this case, the following message appears at the top of the computer screen: YOUR ENTRY FOR THE ACCOUNT NUMBER WAS (a number is shown). THAT ACCOUNT NUMBER IS NOT INCLUDED IN THE (the financial statement to be printed is identified). STUDY A CURRENT TRIAL BALANCE AND CORRECT YOUR INPUT. PRESS ANY KEY TO CONTINUE. . You might enter the same account number the second time. In that case the following message appears at the top of your computer screen: YOU ENTERED THE SAME ACCOUNT NUMBER A SECOND TIME. A PRIMARY OR CONTRA ACCOUNT SHOULD BE IDENTIFIED ONE TIME ONLY. STUDY A CURRENT TRIAL BALANCE AND CORRECT YOUR INPUT. PRESS ANY KEY TO CONTINUE. . You might enter the account number of an inactive account. In that event the following appears at the top of your screen: YOU ENTERED A NUMBER FOR AN INACTIVE ACCOUNT. YOUR INPUT CALLS FOR ACCOUNT NUMBER (a number is shown). STUDY A CURRENT TRIAL BALANCE AND CORRECT YOUR INPUT. PRESS ANY KEY TO CONTINUE. After you press a key, Option 3 continues at the point of your incorrect entry. PRINTED OUTPUT. As already mentioned, printed output from Option 3 will be: . First, an Income Statement. . Second, footnote disclosures for the Income Statement. . Third, a Balance Sheet. 61 . Fourth, footnote disclosures for the Balance Sheet. . Fifth, an analysis of amounts shown on the Income Statement and the Balance Sheet. Footnote disclosure and financial statement analysis capability are not included in the option of CPA-LEDGER that you ordered. These two capabilities, and information on how you may obtain them, are separately discussed in the sections of this chapter entitled, "FOOTNOTE DISCLOSURES' and "ANALYSIS OF FINANCIAL STATEMENTS". Because the output from Option 1 can be quite lengthy, an example is not shown in this chapter. Rather, the example will come from the PRACTICE section that is to follow. After the Income Statement is printed the following message appears on your computer screen: THE INCOME STATEMENT HAS BEEN PRINTED. THE BALANCE SHEET WILL BE PRINTED NEXT. THE COMPUTER IS PAUSING FOR YOU TO MAKE SURE THAT THE PROGRAM DISKETTE IS IN DISK DRIVE 'A'. BEFORE YOU PRESS A KEY TO CONTINUE, BE SURE THAT THE PROGRAM DISKETTE IS IN DISK DRIVE 'A'. IF YOU MAKE A MISTAKE BY N-O-T INSERTING THE PROGRAM DISKETTE IN DISK DRIVE 'A', AN ERROR MESSAGE WILL APPEAR AT THE BOTTOM OF THE COMPUTER SCREEN. THE ERROR MESSAGE WILL STATE THAT THE FILE WAS NOT FOUND. AFTER YOU SEE THE ERROR MESSAGE, TAKE THE FOLLOWING ACTION: 1. PLACE THE PROGRAM DISKETTE IN DISK DRIVE 'A'. 2. ENTER THE FOLLOWING COMMAND AT THE KEYBOARD: RUN "A:BALSHT" 3. PRESS THE RETURN KEY. PRESS ANY KEY TO CONTINUE. After you press a key, the following two messages appear on your screen: CPA-LEDGER IS READY TO BEGIN PROCESSING GENERAL LEDGER FILES THAT ARE ON YOUR 'DATA DISKETTE'. BEFORE YOU CONTINUE, BE SURE THAT THE 'DATA DISKETTE' IS IN DISK DRIVE 'A'. (ONCE YOU PRESS A KEY TO CONTINUE, CPA-LEDGER WILL LOOK FOR THE 'DATA DISKETTE'. IF IT IS NOT IN DISK DRIVE 'A', YOU WILL BE INSTRUCTED WHAT TO DO NEXT.) PRESS ANY KEY TO CONTINUE. 62 After you press a key, the following appears: PRESS THE 'OFF' SWITCH ON YOUR PRINTER. ONCE THE PRINTER IS SWITCHED OFF, ADJUST THE PAPER SO THAT THE PAPER IS AT TOP-OF-PAGE. THE PAPER WILL BE AT TOP-OF-PAGE WHEN THE PRINTER WILL PRINT ON THE VERY FIRST LINE AT THE TOP OF THE PAGE. AFTER THE PAPER IS ADJUSTED SO THAT IT IS AT TOP-OF-PAGE, PRESS THE PRINTER 'ON' SWITCH. PRESS ANY KEY TO CONTINUE. After you press a key, Option 3 starts asking questions about primary and contra accounts that are on the Balance Sheet. Refer to the above section of this chapter entitled, "OPTION 3 SEQUENCE OF EXECUTION AND AN ILLUSTRATION". As with the Income Statement, after you enter information about the primary and contra accounts, the Balance Sheet is printed. FOOTNOTE DISCLOSURES. Footnote disclosures are usually included with financial statements. The objective of these footnotes is to disclose all relevant information needed for economic decisions but which cannot be effectively communicated in any other manner. Full disclosure is important so that the financial statements will not be misleading. Examples of common disclosures are: . An explanation of all significant accounting policies of the company, such as depreciation methods, amortization of intangibles, and inventory costing methods. . Details of pension plans. . Maturity dates on payables and receivables. . Certain restrictions related to long-term debt. . Long-term leases. . Contingencies. . Any changes in accounting principles. After either the Income Statement or the Balance Sheet has been printed, Option 3 displays a message on your computer screen that: 63 . Reminds you of the importance of footnote disclosures. . Identifies common types of disclosures for the financial statement that has just been printed. . Shows an example of a disclosure that you can use as a guide. After you have had a chance to read the message, Option 3 continues by asking if you would like to include any footnote disclosures in the financial statement. If your answer is no, the footnotes are bypassed. If your answer is yes, you will be asked to enter each disclosure, one at a time. Option 3 consecutively numbers each disclosure and gives you a chance to make corrections before they are printed. The following is an example of a disclosure that Option 3 might print. (You enter the narrative, beginning with "Long-Term Notes Payable" and ending with "... and 1987 ($30,000).". CPA-LEDGER does everything else. FOOTNOTE DISCLOSURES. Note 1. Long-Term Notes Payable ($50,000) shown in the Balance Sheet are payable in 1986 ($20,000) and 1987 ($30,000). Footnote disclosure capability is not included in the version of CPA-LEDGER that you ordered. If you desire this added feature, refer to the instructions on pages ii and iii of this User's Manual. 64 FINANCIAL STATEMENT ANALYSIS. Financial statements give valuable information concerning the position of a business and the results of its operation. Analysis of data on financial statements is necessary in reaching conclusions about financial matters. When the financial position of a business is being considered, three factors are usually of primary interest. They are: . Solvency. To be solvent, a business must be able to meet its liabilities as they mature. Statements are analyzed to determine if the business is, and will likely continue to be, solvent. . Profitability. Profitability is measured by earnings shown on Income Statements. The nature, amount, and regularity of earnings are important in appraising profitability. . Endurability. To be endurable, a business must be able to (1) meet both short-term and long-term obligations and (2) provide a reasonable return to the owners. Solvency, profitability, and efficient use of resources are important in appraising endurability. There are many available methods for analyzing financial statements. One method is to use financial and operating relationships expressed in the terms of "ratios". CPA-LEDGER presents several ratios that may be helpful in analyzing your financial statements. You should understand, however, that ratios have little significance unless they are judged after applying appropriate standards. Standards might consist of: . Ratios of your industry. . Ratios of other companies that are within your industry and that are in your local area. . Past ratios of your company. You should also understand that the ratios that you will need for a particular analysis depends upon the purpose of that analysis. CPA-LEDGER presents several ratios that may assist you in making a preliminary study of the solvency, profitability, and endurability of your business. We caution you, however, that no attempt has been made to give CPA-LEDGER capability for complete financial statement analysis. Carefully read the two paragraphs that follow "EXPLANATION OF RATIOS" on page 66. 65 RATIOS PREPARED BY OPTION 3. Option 3 automatically prepares over a dozen ratios for your study. They are: . Ratios for solvency analysis: . Current ratio. . Ratio of working capital to total assets. . Ratio of cash in bank to current liabilities. . Ratio of sales to accounts receivable. . Distribution of cash, accounts receivable, and inventory: . Cash in bank to the total of the three. . Accounts receivable to the total of the three. . Merchandise inventory to the total of the three. . Ratios for profitability analysis: . Ratio of operating income to net sales. . Ratio of net profit to net sales. . Ratio of gross profit to net sales. . Ratio of operating expenses to net sales. . Operating ratio. . Ratio of net income to owners' equity. . Ratios for endurability analysis. . Ratio of assets provided by creditors. . Ratio of assets provided by owners. . Ratio of owner's equity to fixed assets. . Ratio of current assets to total liabilities. . Ratio of operating income to total assets. Option 3 not only prints the ratios. It also prints a short explanation on how each ratio can be used in studying the results of operations. SAMPLE PRINTOUT OF THE ANALYSIS OF FINANCIAL STATEMENTS. The following is a sample printout of how Option 3 presents the analysis of the Income Statement and the Balance Sheet: 66 RATIOS FOR SOLVENCY ANALYSIS. CURRENT RATIO 250.5 % RATIO OF WORKING CAPITAL TO TOTAL ASSETS 15.9 % RATIOS FOR PROFITABILITY ANALYSIS. RATIO OF OPERATING INCOME TO NET SALES 15.0 % RATIO OF NET INCOME TO OWNER'S EQUITY 8.5 % RATIOS FOR DURABILITY ANALYSIS. RATIO OF ASSETS PROVIDED BY CREDITORS 21.5 % RATIO OF ASSETS PROVIDED BY OWNERS 78.5 % EXPLANATION OF RATIOS. THOROUGH ANALYSIS OF FINANCIAL STATEMENTS IS A SPECIALIZED AREA THAT REQUIRES PROFESSIONAL TRAINING AND JUDGEMENT. ALSO, CPA-LEDGER IS NOT DESIGNED TO PROVIDE FINANCIAL STATEMENT ANALYSIS TO COVER ALL NEEDS IN ALL CIRCUMSTANCES. DO NOT MAKE FINAL JUDGMENTS BASED ON RATIOS THAT COME FROM CPA-LEDGER. INSTEAD, USE THE RATIOS AS GENERAL GUIDELINES AND GET PROFESSIONAL ASSISTANCE BEFORE YOU MAKE ANY CONCLUSIONS OR DECISIONS. BEFORE INTERPRETING RATIOS FOR YOUR BUSINESS, YOU SHOULD DEVELOP STANDARDS AS TO WHAT CONSTITUTES A HIGH RATIO AND WHAT CONSTITUTES A LOW RATIO. YOU CAN DO THIS BY USING PAST HISTORY OF YOUR BUSINESS, BY CONSULTING INDUSTRY STANDARDS, AND BY CONSULTING, IF AVAILABLE, RATIOS OF SELECTED COMPETING COMPANIES IN YOUR LOCAL AREA. IN SETTING YOUR STANDARDS, REMEMBER THAT THERE IS A DELICATE BALANCE BETWEEN A RATIO THAT IS TOO HIGH AND A RATIO THAT IS TOO LOW. CURRENT RATIO. THE CURRENT RATIO IS COMPUTED BY DIVIDING TOTAL CURRENT ASSETS BY TOTAL CURRENT LIABILITIES. THIS RATIO IS A MEASURE OF A BUSINESS' ABILITY TO MEET ITS CURRENT OBLIGATIONS. A RULE OF THUMB IS THAT THE CURRENT RATIO IS UNSATISFACTORY IF IT IS LESS THAN 200 PERCENT. HOWEVER, AS MENTIONED, DEVELOP YOUR OWN STANDARD. ALSO CONSIDER THE FOLLOWING: . YOUR BUSINESS CAN HAVE A HIGH CURRENT RATIO AND STILL HAVE A CASH DEFICIENCY. . A HIGH CURRENT RATIO MAY BE THE RESULT OF OVERSTOCKING OF INVENTORY. . A HIGH CURRENT RATIO MAY INDICATE EXCESS FUNDS WHICH SHOULD BE PUT TO BETTER USE, SUCH AS INVESTING IN SHORT-TERM SECURITIES. 67 RATIO OF WORKING CAPITAL TO TOTAL ASSETS. THIS RATIO IS COMPUTED BY DIVIDING CURRENT ASSETS MINUS CURRENT LIABILITIES BY TOTAL ASSETS. THE RATIO IS A MEASURE OF THE DISTRIBUTION AND LIQUITY OF ASSETS AFTER CURRENT LIABILITIES HAVE BEEN DEDUCTED FROM CURRENT ASSETS. A HIGH RATIO MIGHT INDICATE: . EXCESSIVE ACCOUNTS RECEIVABLE, DUE TO POOR COLLECTION PERFORMANCE. . UNUSED CASH THAT POSSIBLY SHOULD BE PUT TO BETTER USE, SUCH INVESTMENT IN SHORT-TERM SECURITIES. . OVERSTOCKING OF INVENTORY. A SHIFT FROM THE MORE CURRENT ASSETS OF CASH AND RECEIVABLES TO INVENTORY IS USUALLY REGARDED AS UNDESIRABLE. A LOW RATIO MAY INDICATE A WEAKNESS IN THE CURRENT POSITION. (SEE THE CURRENT RATIO.) For brevity, additional explanations of the ratios are not shown in this chapter. The remaining explanations are similar in nature. The version of CPA-LEDGER that you ordered does not include the capability for analyzing financial statements. If you would like to have this added feature, refer to the instructions on pages ii and iii of this User's Manual. PRACTICE. Use Option 3 and your "practice diskette" to prepare an Income Statement and a Balance Sheet. . Use the following input: . Beginning date for the Income Statement is 010185 . Ending date for the Income Statement is 022885. . The value of the ending inventory is $112,250.00. (Use 112250.00 as your input.) . The primary and contra accounts are: (Note that Sales and Purchases have two contra accounts each.) 68 ------PRIMARY ACCOUNT------ ---------CONTRA ACCOUNT-------- ACCT. ACCT. NO. ACCOUNT TITLE NO. ACCOUNT TITLE INCOME STATEMENT: 171 SALES 175 SALES RETURNS AND ALLOWANCES 179 SALES DISCOUNT 185 MERCHANDISE PURCHASES 189 PURCHASE RETURNS & ALLOWANCES 193 PURCHASES DISCOUNT BALANCE SHEET: 11 ACCOUNTS RECEIVABLE (TRADE) 15 ALLOW. FOR DOUBTFUL ACCOUNTS 29 Z CORPORATION STOCK 33 ALLOW. TO REDUCE TO MARKET 43 BUILDINGS 47 ALLOW. FOR DEPR. - BUILDINGS 51 EQUIPMENT AND FIXTURES 55 ALLOW. FOR DEPR. - EQUIP & FIX 133 BONDS PAYABLE (8.5%, DUE 1999) 137 UNAMORTIZED DISCOUNT ON BONDS