The following list of accounts was drawn for Tile, Etc., Inc. on December 31, Year 1, after the closing entries were posted: Account Title Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common stock. Retained earnings $135,000 130,000 20,500 435,000 100,000 475,000 104,500 Tile, Etc. had the following transactions in Year 2: 1. Purchased merchandise on account for $605,000. 2. Sold merchandise that cost $445,000 for $940,000 on account. 3. Sold for $270,000 cash merchandise that had cost $170,000. 4. Sold merchandise for $215,000 to credit card customers. The merchandise had cost $106,000. The credit card company charges a 3 percent fee. 5. Collected $670,000 cash from accounts receivable. 6. Paid $635,000 cash on accounts payable. 7. Paid $150,000 cash for selling and administrative expenses. 8. Collected cash for the full amount due from the credit card company (see item 4). 9. Loaned $85,000 to J. Parks. The note had an 6 percent interest rate and a one-year term to maturity. 0. Wrote off $8,000 of accounts as uncollectible. 11. Made the following adjusting entries: (a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account. (b) Recorded seven months of accrued interest on the note at December 31, Year 2 (see item 9). Required Horizontal Statements Model Assets Liabilities Equity Event Cash NRV Accounts Receivable Merchandise Notes Inventory Receivable Interest Receivable Accounts Payable Common Stock Retained Earnings Account Titles for Retained Earnings Bal 135,000+ 138,000+ 435,000+ 100,000+ 475,000 104,500 1. 0+ ol 635,000+ 01+ 0 605,000+ 2a 01+ 940,000+ 01+ 0- 940,000 Sales revenue 26 01+ 0+ (445.000) 0 (445,000) Cost of sales 3a 270,000+ 10+ 0+ 01 " 270,000 Sales revenue 36 0+ 0+ (170,000) 0+ 0- . 4a 0 215,000+ 0+ 4a + 0- " (170,000) Cost of sales 215,000 Sales revenue Cost of sales 46 0 01+ 0 5. 670,000+ (67,000)+ 0+ 0- (635,000)+ 0 0+ 0- 635,000 7. (150,000) 0+ 01+ 01 (150,000) Selling and administrative expense Credit card expense 8 . (215,000) 0+ 01 9 (85,000) 85,000 01-1 10. 0+ (8,000) 0+ 11a 01. 01- 01- 11b 0+ Bal 205.000. 1,003,000+ 455,000+ 85,000- 0- 1,340,000+ 475,000 764,500 Uncollectible accounts expense Interest revenue Ray A Req 81 >