Working backward to cash receipts and disbursements. The Secunda Company's trial balance at the beginning of Year 2 and the adjusted, preclosing trial balance at the end of Year 2 appear in Exhibit 3.21. The company purchases all goods and services acquired during the year on account. The Other Operating Expenses account includes depreciation charges and expirations of prepayments. The company debits dividends declared during the year to Retained Earnings.

Prepare a schedule showing all cash transactions for Year 2. (Hint: Set up T-accounts for each of the accounts listed in the trial balance, and enter the amounts shown as of January 1, Year 2, and December 31, Year 2. Starting with the entries in revenue and expense accounts, reconstruct the transactions that took place during the year, and enter the amounts in the appropriate T-accounts. The Retained Earnings account in the trial balance does not yet reflect the effects of earnings activities because the firm has not yet made closing entries.)

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EXHIBIT 3.21 Debits Cash Accounts Receivable THE SECUNDA COMPANY Trial Balance January 1 and December 31, Year 2 (Problem 36] Merchandise Inventory Prepayments Land, Buildings, and Equipment Cost of Goods Sold Interest Expense Other Operating Expenses Total Debits Credits Accumulated Depreciation Interest Payable Accounts Payable Mortgage Payable Capital Stock Retained Earnings Sales... Total Credits 1/1/Year 2 12/31/Year 2 $ 20,000 36,000 $ 9,000 51,000 60,000 45,000 2,000 1,000 40,000 40,000 50,000 3,000 29,000 $143,000 $ 16,000 $243,000 $ 18,000 1,000 2,000 30,000 40,000 20,000 17,000 50,000 50,000 26,000 16,000 100,000 $143,000 $243,000