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Chapter 9 Homework Assignment Saved 18 Required information [The following information applies to the questions displayed below.] Part 3 of 3 The following transactions apply to Park Co. for Year 1: 5.65 points eBook 1. Received $31,000 cash from the issue of common stock. 2. Purchased inventory on account for $141,000. 3. Sold inventory for $174,500 cash that had cost $107,500. Sales tax was collected at the rate of 7 percent on the inventory sold. 4. Borrowed $24,000 from First State Bank on March 1, Year 1. The note had a 7 percent interest rate and a one-year term to maturity 5. Paid the accounts payable (see transaction 2). 6. Paid the sales tax due on $143,500 of sales. Sales tax on the other $31,000 is not due until after the end of the year. 7. Salaries for the year for the one employee amounted to $30,000. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income tax withheld was $5,300. 8. Paid $2,600 for warranty repairs during the year. 9. Paid $11,500 of other operating expenses during the year. 10. Paid a dividend of $5,200 to the shareholders. Print References Adjustments: 11. The products sold in transaction 3 were warranted. Park estimated that the warranty cost would be 4 percent of sales. 12. Record the accrued interest at December 31, Year 1. 13. Record the accrued payroll tax at December 31, Year 1. Assume no payroll taxes have been paid for the year and that the unemployment tax rate is 6.0 percent (federal unemployment tax rate is 0.60 percent and the state unemployment tax rate is 5.40 percent on the first $7,000 of earnings per employee). c. Prepare an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1. (Statement of Changes in Stockholders' Equity and Statement of Cash Flows only: Items to be deducted must be indicated with a minus sign.) $ PARK CO. Income Statement For the Year Ended December 31, Year 1 Sales revenue Cost of goods sold Gross margin Expenses Other operating expenses $ 11,500 Warranty expense 6,980 0 174,000 107,500 66,500 $ 0 0 0 Total operating expenses Operating income Interest revenue Net income 18,480 48,020 1,400 46,620 $ PARK CO. Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 1 Beginning common stock $ 0 Add: Stock issued 31,000 Ending common stock Beginning retained earnings $ 0 Net income 46,620 Add: Dividends 5,200 Ending common stock Total stockholders' equity 31,000 51,820 82,820 $ PARK CO. Balance Sheet As of December 31, Year 1 $ Assets Cash Merchandise inventory Interest revenue Total assets Liabilities Warranties payable Notes payable 48,9201 33,500 1,400 83,820 4,380 24,000 0 0 0 0 0 0 0 $ 0 28,380 Total liabilities Stockholders' Equity Common stock Retained earnings $ 31,000 46,620 0 Total Stockholders' equity Total liabilities and stockholders' equity 77,620 106,000 $ PARK CO. Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: Inflow from customers $ 186,715 Outflow for expenses (11,500) Inflow from sales tax 12,215: Outflow to purchase inventory (141,000) 0 0 $ 46,430 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities: Inflow from stock issue Inflow from loan $ 31,000 24,000 0 0 Net cash flow from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance 55,000 101,430 0 $ 101,430 Chapter 9 Homework Assignment Saved 18 Required information [The following information applies to the questions displayed below.] Part 3 of 3 The following transactions apply to Park Co. for Year 1: 5.65 points eBook 1. Received $31,000 cash from the issue of common stock. 2. Purchased inventory on account for $141,000. 3. Sold inventory for $174,500 cash that had cost $107,500. Sales tax was collected at the rate of 7 percent on the inventory sold. 4. Borrowed $24,000 from First State Bank on March 1, Year 1. The note had a 7 percent interest rate and a one-year term to maturity 5. Paid the accounts payable (see transaction 2). 6. Paid the sales tax due on $143,500 of sales. Sales tax on the other $31,000 is not due until after the end of the year. 7. Salaries for the year for the one employee amounted to $30,000. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income tax withheld was $5,300. 8. Paid $2,600 for warranty repairs during the year. 9. Paid $11,500 of other operating expenses during the year. 10. Paid a dividend of $5,200 to the shareholders. Print References Adjustments: 11. The products sold in transaction 3 were warranted. Park estimated that the warranty cost would be 4 percent of sales. 12. Record the accrued interest at December 31, Year 1. 13. Record the accrued payroll tax at December 31, Year 1. Assume no payroll taxes have been paid for the year and that the unemployment tax rate is 6.0 percent (federal unemployment tax rate is 0.60 percent and the state unemployment tax rate is 5.40 percent on the first $7,000 of earnings per employee). c. Prepare an income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1. (Statement of Changes in Stockholders' Equity and Statement of Cash Flows only: Items to be deducted must be indicated with a minus sign.) $ PARK CO. Income Statement For the Year Ended December 31, Year 1 Sales revenue Cost of goods sold Gross margin Expenses Other operating expenses $ 11,500 Warranty expense 6,980 0 174,000 107,500 66,500 $ 0 0 0 Total operating expenses Operating income Interest revenue Net income 18,480 48,020 1,400 46,620 $ PARK CO. Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 1 Beginning common stock $ 0 Add: Stock issued 31,000 Ending common stock Beginning retained earnings $ 0 Net income 46,620 Add: Dividends 5,200 Ending common stock Total stockholders' equity 31,000 51,820 82,820 $ PARK CO. Balance Sheet As of December 31, Year 1 $ Assets Cash Merchandise inventory Interest revenue Total assets Liabilities Warranties payable Notes payable 48,9201 33,500 1,400 83,820 4,380 24,000 0 0 0 0 0 0 0 $ 0 28,380 Total liabilities Stockholders' Equity Common stock Retained earnings $ 31,000 46,620 0 Total Stockholders' equity Total liabilities and stockholders' equity 77,620 106,000 $ PARK CO. Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: Inflow from customers $ 186,715 Outflow for expenses (11,500) Inflow from sales tax 12,215: Outflow to purchase inventory (141,000) 0 0 $ 46,430 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities: Inflow from stock issue Inflow from loan $ 31,000 24,000 0 0 Net cash flow from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance 55,000 101,430 0 $ 101,430