Retail Store had the following balances at the end of 2018. Cash $16,000 Accounts Receivable $18,500 Allowance

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Question:

Retail Store had the following balances at the end of 2018.

Cash $16,000

Accounts Receivable $18,500

Allowance for Doubtful Accounts $500

Retained Earnings $34,000

All accounts have normal balances.

The company experienced the following events in 2019.

1.The company has 300,000 shares of common stock authorized and on January 1, 2019 they issued 75,000 shares of $2 par for $15 per share. 2.On January 1st the company borrowed $150,000 from State Bank at a 5.5% annual rate of interest. The term of the note was 10 years and required annual payments on December 31st of $19,900. 3.On January 1st the company issued bonds with a face value of $100,000. The bonds have a stated rate of 6% and mature in 5 years. The bonds were sold at 97 and carry an effective rate of 6.7262%. The bonds require an annual interest payment on December 31st of each year. 4.The company purchased equipment costing $178,000 on January 1st. The equipment is expected to have an 8 year life and have an estimated salvage value of $26,000. The company will depreciate this asset using the double-declining balance method. 5.The company provided services totaling $212,000 on account. 6.The company paid operating expenses of $65,000 throughout the year. 7.The company collected $183,000 of their accounts receivable. 8.The company re-purchased 7,000 shares of their common stock which was originally sold for $15 per share for $13 per share. 9.On December 31st the company made their first payment on the note. 10.On December 31st the company made their first interest payment on the bond. 11.The company uses the allowance method of accounting for uncollectible accounts and estimates that 4% of their accounts receivable will be uncollectible. 12.The company recorded depreciation on the equipment purchased in #4. 13.On October 31st the company declared a $21,000 dividend to all shareholders of record on December 31st to be paid on February 1, 2020. 14.From the December 2019 bank statement, the company needs to recognize $250 in interest.

Required:

1. Record the 2019 transactions (Include total debits and credits).

2. Prepare a multi-step income statement for the year ended 12/31/19.