Question

McGulre Corporation began operations In 2018. The company purchases computer equipment from manufacturers and then sells to retall stores. During 2018, the bookkeeper used a check register to record all cash recelpts and cash disbursements. No other Journals were used. The following is a recap of the cash recelpts and disbursements made during the year. Cash receipts Sale of common stock Collections from customers Borrowed from local bank on April 1, note signed requiring $ 7e,888 325,8e8 principal and interest at 12% to be paid on March 31, 2019 Total cash receipts 35,888 $ 43e,8ee Cash disbursements: Purchase of merchandise Payment of salaries and wages Purchase of office equipment Payment of rent on building Miscellaneous expenses $ 197,5ee 77,588 42,888 18,758 12,588 S 34e,258 Total cash disbursements You are called In to prepare financial statements at December 31, 2018. The following additional Information was provided to you 1. Customers owed the company $19,500 at year-end. 2. At year-end, $29,750 was still due to suppliers of merchandise purchased on credit. 3. At year-end, merchandise Inventory costing $47,000 still remalned on hand. 4. Salarles and wages owed to employees at year-end amounted to $5,250. 5. On December 1, $3,300 In rent was pald to the owner of the building used by McGulre. This represented rent for the months of December through February 6. The office equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2018. Straight-line depreclation is used.

Answer 1

INCOME STATEMENT
Sales (325000+19500)		344500
Cost of goods sold (197500+29750-47000)		180250
Gross profit		164250
xpenses:
Salaries and wages (77500+5250)	82750
Rent expense	8550
Miscellaneous expense	12500
Depreciation	4200
Interest expense (35000*12%*9/12)	3150
Total expenses		111150
Net income		53100
BALANCE SHEET
Current assets:
Cash (430000-340250)	89750
Accounts receivable	19500
Inventory	47000
Prepaid rent (3300*2/3)	2200	158450
Non -current assets:
Office equipment	42000
Accumulated depreciation	4200	37800
Total assets		196250
Current liabilities:
Accounts payable	29750
Salries and wages	5250
Notes payable	35000
Interest payable	3150	73150
Shareholders' equity:
Common stock	70000
Retained earnings	53100	123100
Total liabilities & Stockholders' equity		196250