Comprehensive accounting cycle problem (uses percent of revenue allowance method) The following trial balance was prepared for Tile, Etc., Inc. on December 31, 2017, after the closing entries were posted: Account Title Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Accounts Payable Common Stock Retained Earnings $110.000 125,000 18,000 425,000 95,000 450.000 97,000 Tile, Etc. had the following transactions in 2018: 1. Purchased merchandise on account for $580,000. 2. Sold merchandise that cost $420,000 for $890,000 on account. 3. Sold for $245,000 cash merchandise that had cost $160,000. 4. Sold merchandise for $190,000 to credit card customers. The merchandise had cost $96,000. The credit card company charges a 4 percent fee. 5. Collected $620,000 cash from accounts receivable. 6. Paid $610,000 cash on accounts payable. 7. Paid $145,000 cash for selling and administrative expenses. 8. Collected cash for the full amount due from the credit card company (see item 4). 9. Loaned $60,000 to J. Parks. The note had an 8 percent interest rate and a one-year term to maturity. 10. Wrote off $7,500 of accounts as uncollectible. 11. Made the following adjusting entries: (a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account. (b) Recorded seven months of accrued interest on the note at December 31, 2018 (see item 9). Required a. Organize the transaction data in accounts under an accounting equation. b. Prepare an income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flows for 2018. Req A Req B1 Req B2 Req B3 Req B4 Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank.) TILE, ETC., INC. Horizontal Statements Model Assets = Liabilities + Equity Accounting Titles for Merchandise Notes Interest |_ Accounts. Common Retained Allowance Retained IT Inventory Receivable Received Payable Stock Earnings Event Accounts Receivable + + + + I + + + Bal. 1. 2a. 2b. + + + + + + + + + 3a. 3b. + + + 4a. + + + + + + + + + + + + + + + + + + + + + 10. + + + + + + 11a. 11b. Bal. + + + 0+ + + 0= 0 Reg A Req B1 > Req A Req B1 Req B2 Req B3 Req B4 Prepare an income statement for 2018. TILE, ETC., INC. Income Statement For the Year Ended December 31, 2018 Operating expenses Total operating expenses Add: Non-operating items Reg A Req B2 > Req A Req B1 Req B2 Req B3 Req B4 Prepare a statement of changes in stockholders' equity for 2018. TILE, ETC., INC. Statement of Changes in Stockholders' Equity For the Year Ended December 31, 2018 Beginning common stock Ending common stock Beginning retained earnings Ending retained earnings Total stockholders' equity EA Rega Req B1 Req B2 Req B3 Req B4 Prepare a balance sheet for 2018. (Be sure to list the assets in the order of their liquidity.) TILE, ETC., INC. Balance Sheet As of December 31, 2018 Assets Total assets Liabilities 0 Total liabilities Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity $ Req B2 Req B4 > Req A Req B1 Req B2 Req B3 Req B4 Prepare a statement of cash flows for 2018. (Amounts to be deducted should be indicated with a minus sign.) TILE, ETC., INC. Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from operating activities: Net cash flow from operating activities Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities Net change in cash Ending cash balance $ 0