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the following trial balance was prepared for Tile, Etcetera, Incorporated, on December 31, Year 1, after the closing entries were posted. Account Title Debit Credit

the following trial balance was prepared for Tile, Etcetera, Incorporated, on December 31, Year 1, after the closing entries were posted.

Account Title Debit Credit
Cash $155,000
Accounts receivable 134,000
Allowance for doubtful accounts $22,500
Inventory 443,000
Accounts payable 104,000
Common stock 495,000
Retained earnings 110,500
Totals $732,000 $732,000

Tile, Etcetera had the following transactions in Year 2:

  1. Purchased merchandise on account for $625,000.
  2. Sold merchandise that cost $465,000 for $980,000 on account.
  3. Sold for $290,000 cash merchandise that had cost $178,000.
  4. Sold merchandise for $235,000 to credit card customers. The merchandise had cost $114,000. The credit card company charges a 3 percent fee.
  5. Collected $710,000 cash from accounts receivable.
  6. Paid $655,000 cash on accounts payable.
  7. Paid $154,000 cash for selling and administrative expenses.
  8. Collected cash for the full amount due from the credit card company (see item 4).
  9. Loaned $55,000 to J. Parks. The note had an 6 percent interest rate and a one-year term to maturity.
  10. Wrote off $8,400 of accounts as uncollectible.
  11. Made the following adjusting entries:
  1. (a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account.
  2. (b) Recorded seven months of accrued interest on the note at December 31, Year 2 (see item 9).

Required

  1. Prepare general journal entries for these transactions, and post the entries to T-accounts. Also, prepare an income statement, a statement of changes in stockholders equity, and a balance sheet for Year 2.

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