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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: Account Title Cash
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 | $ | 110,000 | ||||
Accounts receivable | 125,000 | |||||
Allowance for doubtful accounts | 18,000 | |||||
Inventory | 425,000 | |||||
Accounts payable | 95,000 | |||||
Common stock | 450,000 | |||||
Retained earnings | 97,000 | |||||
Tile, Etc. had the following transactions in Year 2:
- Purchased merchandise on account for $580,000.
- Sold merchandise that cost $420,000 for $890,000 on account.
- Sold for $245,000 cash merchandise that had cost $160,000.
- Sold merchandise for $190,000 to credit card customers. The merchandise had cost $96,000. The credit card company charges a 4 percent fee.
- Collected $620,000 cash from accounts receivable.
- Paid $610,000 cash on accounts payable.
- Paid $145,000 cash for selling and administrative expenses.
- Collected cash for the full amount due from the credit card company (see item 4).
- Loaned $60,000 to J. Parks. The note had an 8 percent interest rate and a one-year term to maturity.
- Wrote off $7,500 of accounts as uncollectible.
- 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
- Organize the transaction data in accounts under an accounting equation.
- 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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