Hammond Inc. experienced the following transactions for 2007, its first year of operations:

1. Issued common stock for \($80,000\) cash.

2. Purchased \($225,000\) of merchandise on account.

3. Sold merchandise that cost \($148,000\) for \($294,000\) on account.

4. Collected \($242,000\) cash from accounts receivable.

5. Paid \($210,000\) on accounts payable.

6. Paid \($46,000\) of salaries expense for the year.

7. Paid other operating expenses of \($35,000\) .

8. Hammond adjusted the accounts using the following information from an accounts receivable aging schedule.

Required:

a. Organize the transaction data in accounts under an accounting equation.

b. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Hammond Inc. for 2007.

c. What is the net realizable value of the accounts receivable at December 31, 2007?

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Number of Days Percent Likely to Allowance Past Due Amount Be Uncollectible Balance Current $33,000 .01 0-30 12,000 .05 31-60 3,000 .10 61-90 2,500 .20 Over 90 days 1,500 .50 728