Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2018, the bookkeeper used a

McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2018, the bookkeeper used a check register to record all cash receipts and cash disbursements. No other journals were used. The following is a recap of the cash receipts and disbursements made during the year.

Cash receipts:
Sale of common stock $ 67,500
Collections from customers 320,000
Borrowed from local bank on April 1, note signed requiring
principal and interest at 12% to be paid on March 31, 2019 34,000
Total cash receipts $ 421,500
Cash disbursements:
Purchase of merchandise $ 195,000
Payment of salaries and wages 76,000
Purchase of office equipment 40,500
Payment of rent on building 10,500
Miscellaneous expenses 12,200
Total cash disbursements $ 334,200

You are called in to prepare financial statements at December 31, 2018. The following additional information was provided to you:

  1. Customers owed the company $19,000 at year-end.
  2. At year-end, $29,400 was still due to suppliers of merchandise purchased on credit.
  3. At year-end, merchandise inventory costing $46,400 still remained on hand.
  4. Salaries and wages owed to employees at year-end amounted to $5,100.
  5. On December 1, $3,150 in rent was paid to the owner of the building used by McGuire. This represented rent for the months of December through February.
  6. The office equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2018. Straight-line depreciation is used.

Prepare an income statement for 2018 and a balance sheet as of December 31, 2018. (For Balance Sheet only, items to be deducted must be indicated with a negative amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Cases An Interactive Learning Approach

Authors: Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt

7th Edition

0134421825, 9780134421827

More Books

Students also viewed these Accounting questions

Question

=+2. What different types of products exist in the book industry?

Answered: 1 week ago