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The following list of accounts was drawn for Tile, Etc., Inc. on December 31, Year 1, after the closing entries were posted: Tile, Etc. had
The following list of accounts was drawn for Tile, Etc., Inc. on December 31, Year 1, after the closing entries were posted: Tile, Etc. had the following transactions in Year 2: 1. Purchased merchandise on account for $675,000. 2. Sold merchandise that cost $515,000 for $1,080,000 on account. 3. Sold for $340,000 cash merchandise that had cost $198,000. 4. Sold merchandise for $285,000 to credit card customers. The merchandise had cost $134,000. The credit card company charges a 3 percent fee. 5. Collected $810,000 cash from accounts receivable. 6. Paid $705,000 cash on accounts payable. 7. Paid $164,000 cash for selling and administrative expenses. 8. Collected cash for the full amount due from the credit card company (see item 4). 9. Loaned $69,000 to J. Parks. The note had an 6 percent interest rate and a one-year term to maturity. 10. Wrote off $9,400 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 a. Organize the transaction data in accounts under an accounting equation. b. Prepare an income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flows for Year 2
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