Rick and Morty Inc. began their operations in 2022 but did not start their complete operations until this year. The year 2023 started with the following beginning balances in the companys books:

1. Cash $ 100,000
2. Receivables $ 57,400
3. Allowance for doubtful accounts $ 5,400
4. Inventory $ 420,000
5. Equipment $ 9,900
6. Accumulated Depreciation Equip. $ 5,400
7. Common Stock $ 500,000
8. Paid-in-capital $ 100,000
9. Retained earnings $ 26,500

The company was engaged in the following transactions during the year:

1. Revenues

Sales

8000 units were sold during the year at a rate of $80. The company sold these units on account (credit). They received an amount of $626,600 from the receivables during the year.

Other revenue

On Oct 1, 2023, the company received $147,000 from a local bank and promised to deliver 100 units on a future date. The contract states that ownership passes to the bank when the company delivers the products to a third-party carrier. In addition, the company has agreed to provide a replacement shipment at no additional cost if the product is lost in transit. The stand-alone price of a gold bar is $1,440 per unit, and the company estimates the stand-alone price of the replacement insurance service to be $60 per unit. The third-party carrier picked up the units from the company on Dec 30, and delivery to the bank occurred on Jan 1, 2024.

2. Expenses

During the year, the company had the following expenditures:

1. Salaries and wages - $ 120,000 (out of which 110,000 were paid in cash till Dec 31, 2023)
2. Selling, General and Administration expenses - $ 80,000 (everything was paid in cash)

3. Receivables

The company grants its customers 30 days credit. The company uses the allowance method for its uncollectible accounts receivable.

Bad debt accrual is made by multiplying 3% times the amount of credit sales for the year. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly.

At the beginning of 2023, accounts receivable were $57,400 and the allowance account had a credit balance of $54,00.

Accounts receivable activity for 2023 was as follows:

Beginning balance $ 57,400

Credit sales 640,000

Collections (626,600)

Write-offs (6,800)

Ending balance $ 64,000

The companys controller prepared the following aging summary of year-end accounts receivable:

Age Group Amount Percent Uncollectible

060 days $ 43,000 4%

6190 days 9,800 15

91120 days 6,000 25

Over 120 days 5,200 40

Total $ 64,000

4. Inventory

The company began January with 6,000 units of its principal product. The cost of each unit is $70. Inventory transactions for the month of January are as follows:

Purchases

Date of Purchase Units Unit Cost Total Cost

January 10 5,000 $ 50 $ 250,000

July 18 6,000 60 360,000

Totals 11,000 $ 610,000

Sales

Date of Sale Units

January 5 3,000

July 12 2,000

November 20 3,000

Total 8,000

9,000 units were on hand at the end of the month.

The company follows the FIFO method and maintains a perpetual inventory system.

5. Cash

On November 30, 2023, the company purchased Treasury Bills at $100,000. These treasury bills are going to mature at the end of February 2024.

6. Property, plant, and equipment and Intangible assets

1. On March 1, the company acquired five acres of land with a building that will be used as a warehouse. The company paid $100,000 in cash for the property. According to appraisals, the land had a fair value of $75,000 and the building had a fair value of $45,000.
2. On July 1, the company signed a $40,000 noninterest-bearing note to purchase equipment. The $40,000 payment is due on September 1, 2025. Assume that 8% is a reasonable interest rate.
3. On September 15, a truck was donated to the corporation. Similar trucks were selling for $2,500.
4. On October 10, the company purchased equipment for cash. The purchase price was $15,000 and $500 in freight charges also were paid.
5. On December 2, the company acquired equipment. The company was short of cash and could not pay the $5,500 normal cash price. The supplier agreed to accept 200 shares of the company's no-par common stock in exchange for the equipment. The fair value of the stock is not readily determinable.
6. The Company traded its old equipment for new equipment. The new equipment has a fair value of $11,500. The old equipment had an original cost of $9,900 and a book value of $4,500 at the time of the trade. It also paid cash of $9,000 as part of the trade. The exchange has commercial substance.
7. The Company spent $17,000 during the year for experimental purposes in connection with the development of a new product.
8. A patent was purchased at a price of $10,000 and the company paid $2,000 as filing and legal fees.

7. Depreciation and Amortization policy

The building is depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a five-year useful life, no residual value, and is amortized using the straight-line method. The equipment is depreciated using straight-line method and the service life of the equipment is 5 years. The trucks are depreciated using double declining balance method with a service life of 8 years.

8. Investments

The company acquired as a long-term investment $240,000 of 6% bonds, dated July 1, on July 1, 2023. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. The company paid $200,000 for the bonds and will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2023, was $210,000. The entry for interest expense has not been recorded yet.

9. Liabilities

1. The company obtained a loan of $100,000 from the bank at an interest rate of 10% on June 1, 2023. The amount was used to purchase plant and equipment.
2. To manage working capital, the company also obtained a short-term borrowing on November 1, 2023. The borrowed amount was $ 50,000 and agreed to pay an interest amount of $1,000 on February 1, 2024.

10. Shareholders Equity

The company has 50,000 shares outstanding as at the beginning of the year. During the year, the company issued 20,000 shares at par value of $10. The shares were issued at a price of $15.

Required:

(a) Income statement for the year ended December 31, 2023

(b) Balance sheet as at December 31, 2023

Please also show work through journal entries and ledger accounts and T-accounts.