You are an entrepreneur who started up a merchandising firm. Although you are enterprising and innovative,...

Transcribed Image Text:

You are an entrepreneur who started up a merchandising firm. Although you are enterprising and innovative, you kept limited and incomplete records. Purchases of merchandise were paid for by check, but most other items were paid out of cash receipts. Weekly, the amount of cash on hand was deposited in a bank account. No record was kept of the cash in bank, nor was a record kept of sales. Accounts receivable were recorded only by keeping a copy of the customer's ticket, and this copy was given to the customer when he paid his account. An analysis of the bank statements showed total deposits (including the original cash investment) of $1,305,000, and total cash payments amounted to $1,270,160. Details of these receipts and payments follow below. You had started your business on January 1, 2021, with $200,000 cash and a very small office which had cost $150,000, of which one-third was the value of the land. The building has an estimated useful life of 25 years and no expected residual value. An inventory of merchandise taken on December 31, 2021 showed $167,100 of merchandise on a cost basis. (Hint: inventory that was purchased during the year and is no longer on hand is recorded as Cost of Goods Sold.) Tickets for accounts receivable totalled $12,700. Unpaid suppliers' invoices for merchandise amounted to $37,800. During the You are an entrepreneur who started up a merchandising firm. Although you are enterprising and innovative, you kept limited and incomplete records. Purchases of merchandise were paid for by check, but most other items were paid out of cash receipts. Weekly, the amount of cash on hand was deposited in a bank account. No record was kept of the cash in bank, nor was a record kept of sales. Accounts receivable were recorded only by keeping a copy of the customer's ticket, and this copy was given to the customer when he paid his account. An analysis of the bank statements showed total deposits (including the original cash investment) of $1,305,000, and total cash payments amounted to $1,270,160. Details of these receipts and payments follow below. You had started your business on January 1, 2021, with $200,000 cash and a very small office which had cost $150,000, of which one-third was the value of the land. The building has an estimated useful life of 25 years and no expected residual value. An inventory of merchandise taken on December 31, 2021 showed $167,100 of merchandise on a cost basis. (Hint: inventory that was purchased during the year and is no longer on hand is recorded as Cost of Goods Sold.) Tickets for accounts receivable totalled $12,700. Unpaid suppliers' invoices for merchandise amounted to $37,800. During the