Sam's Town

160 #10 Bond Homework Problem 104 A Challenging Cash Flow Problem- The following balances are from the beginning of the year for Sam's Town Company as of Decem 2019: Cash Accounts Receivable Allowance for Doubtful Accts Inventory Prepaid Rent Equipment Accumulated Depreciation Security Deposit Accounts Payable Wages Payable Interest Payable Taxes Payable Note Payable Common Stock (S1 cach) Retained Earnings 120,000 40,000 2,000 60,000 (3 junkets) 3,000 200,000 60,000 10,000 92,000 5,000 5,000 8,000 100,000 60,000 101,000 For 2020: Received all beginning accounts receivable and paid all beginning accounts payable Bought five Junkets at $25,000 each, 20% down, rest next year Sold six Junkets, $50,000 each, 60% down, 40% next year Pald cash wages of $40,000 and at the end of the year owed employees $2,000 Paid utilities of $12,000 and advertising of $10,000. On June 30, they paid the annual payment of $10,000 principal plus interest on the Note Payable. The note was taken out on June 30 of the previous year (Can you figure out the interest rate?) On August 1, purchased a new wagon for delivery of the junkets for $20,000. On December 1, they declared and paid a dividend of $5,000 On December 31, the company borrowed $75,000 from the bank and used the proceeds to purchase a piece of land. The note is payable in five years. The interest at 6% is payable annually on December 31 of each year starting in 2021. During the year they paid $9,000 in rent (rent is $1,000 per month) The company uses the FIFO inventory flow assumption The depreciation for the year was $40,000 The company estimates that 3% of its accounts receivable will never be collected. During the year the company wrote off $1,500 in bad accounts. The tax rate is 30%. During the year the company paid all of last year's taxes and 50% of 2020 taxes. Prepare Journal Entries, T-Accounts, and Financial Statements for the year 2020