Question: McGuire Corporation began operations in 2013 The company purchases computer

McGuire Corporation began operations in 2013. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2013, the bookkeeper used a check register to record all cash receipts and cash disbursements. No other journals were used. The following is a recap of the cash receipts and disbursements made during the year.

Cash receipts:
Sale of common stock................. $ 50,000
Collections from customers ............... 320,000
Borrowed from local bank on April 1, note signed requiring
principal and interest at 12% to be paid on March 31, 2014 ... 40,000
Total cash receipts .................... $410,000
The Role of Accounting as an Information System
Cash disbursements:
Purchase of merchandise ............... $220,000
Payment of salaries ............... 80,000
Purchase of equipment ............... 30,000
Payment of rent on building ............... 14,000
Miscellaneous expenses ............... 10,000
Total cash disbursements ............... $354,000
You are called in to prepare financial statements at December 31, 2013. The following additional information was provided to you:
1. Customers owed the company $22,000 at year-end.
2. At year-end, $30,000 was still due to suppliers of merchandise purchased on credit.
3. At year-end, merchandise inventory costing $50,000 still remained on hand.
4. Salaries owed to employees at year-end amounted to $5,000.
5. On December 1, $3,000 in rent was paid to the owner of the building used by McGuire. This represented rent for the months of December through February.
6. The equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2013. Straightline depreciation is used.
Required:
Prepare an income statement for 2013 and a balance sheet as of December 31, 2013.


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  • CreatedDecember 23, 2013
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