Question
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:
- Customers owed the company $19,000 at year-end.
- At year-end, $29,400 was still due to suppliers of merchandise purchased on credit.
- At year-end, merchandise inventory costing $46,400 still remained on hand.
- Salaries and wages owed to employees at year-end amounted to $5,100.
- 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.
- 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.)
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