Dawson O€™Connor is the owner of Miller Island Sales, a distributor of fishing supplies. The following is the balance sheet of the company as of December 31, 2015:

Dawson keeps very few records and has asked you to help him prepare the 2016 financial statements for Miller Island Sales. An analysis of the 2016 cash transactions recorded in the company€™s checkbook indicates deposits and checks as follows:
Total deposits: $173,200; all were collections from customers except for a long-term $10,000 bank loan.
Checks written: $169,800 summarized as follows:
Inventory ................. $123,100
Salaries ................. 4,250
Rent ................... 4,800
Equipment ............... 4,000
Note payments (including interest of $650) .. 2,650
Office expense ............. 3,400
Auto expense ............... 4,100
Withdrawals .............. 23,500
$169,800
Other information about the company is as follows:
1. Accounts receivable at December 31, 2016: $ 9,200.
2. Accounts payable at December 31:

3. Salaries payable at December 31, 2016, $1,800.
4. Equipment is depreciated by the straight-line method over a 10-year life. The equipment purchased in 2016 was acquired on July 1. All of the equipment will have zero salvage value at the end of its useful life.
5. Interest payable at December 31, 2016: $140.
6. The company uses a periodic inventory system. Inventory at December 31, 2016: $17,400.
Required:
1. Prepare a worksheet to summarize the transactions and adjustments of Miller Island Sales for 2016.
2. Prepare a 2016 income statement and a balance sheet as of December 31, 2016.

Transcribed Image Text:

Cash Accounts receivoble Inventory Equipment $2,300 Accounts payable $ 6,400 1,200 10.400 Salaries payable 12,500 8,000 las: Aceoumulaked depr126,2000.0Cons eopill$20 10 6500 D O'Connor, capital 26,700 19,100 26, 700 $8,500 200 $8,700 2015: Inventory $6,100 201d: lnventory 300 $6,400 Office expense Auto expense