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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:

  1. Purchased merchandise on account for $580,000.
  2. Sold merchandise that cost $420,000 for $890,000 on account.
  3. Sold for $245,000 cash merchandise that had cost $160,000.
  4. Sold merchandise for $190,000 to credit card customers. The merchandise had cost $96,000. The credit card company charges a 4 percent fee.
  5. Collected $620,000 cash from accounts receivable.
  6. Paid $610,000 cash on accounts payable.
  7. Paid $145,000 cash for selling and administrative expenses.
  8. Collected cash for the full amount due from the credit card company (see item 4).
  9. Loaned $60,000 to J. Parks. The note had an 8 percent interest rate and a one-year term to maturity.
  10. Wrote off $7,500 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

  1. Organize the transaction data in accounts under an accounting equation.
  2. 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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