Steve’s Furniture Mart is a discount retailer with a December 31 fiscal year-end. The trial balance on January 1, 2010, shows the following (all amounts in thousands of dollars):

Required:

1. Analyze and record the transactions below.

2. Prepare the following financial statements: (i) Income Statement, (ii) Balance Sheet, and (iii) Statement of Cash Flows using both the Direct and Indirect method. 

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Acct Account Title No. 101 Cash 102 Accounts receivable 103 Inventory 104 Land 105 Equipment 106 Accumulated depreciation 107 Other long-term assets 201 Accounts payable 202 Notes payable 203 Wages payable 204 Interest payable 205 Income taxes payable 301 Contributed capital (65,000 shares) 302 Retained earnings 401 Sales revenue 501 Cost of goods sold 502 Depreciation expense 503 504 Interest expense 505 SG&A expense Totals b C d e f 8 h Income tax expense i j k EGO G 3/1/10 4/5/10 7/1/10 7/15/10 8/1/10 9/1/10 9/15/10 10/1/10 10/15/10 10/31/10 12/15/10 DR 12/31/10 12/31/10 3 5 12/31/10 12/31/10 12/31/10 12 The following is a summary of transactions that occurred during 2010 (dollar amounts are in thousands): Date: 60 4 84 CR Information for year-end adjusting entries is as follows: 6 5 65 8 84 Borrowed $10, signing a 5 year, 12% note payable, dated March 1, 2010. Purchased land for a future building site, paying $9 cash. Sales for 2010 were $160, including $40 on account. Sold 3,000 additional shares of capital stock, and received a total of $3 cash. Incurred and paid $16 in advertising costs. Collected $24 on outstanding customer balances. Purchased other long-term assets for $10 cash. Purchased $87 of inventory on account. Paid trade vendors $13 of balance due. Signed a $25 contract to deliver furnishings to a new customer on Feb. 1, 2011. Declared and paid a $17 cash dividend. A physical count of inventory at Dec. 31, 2010 indicated a balance of $14. Depreciation on equipment, $6. Interest accrued on notes payable (show calculation). Wages earned after the Dec. 24, 2010 payroll, to be paid on Jan. 2, 2011, $12. Income tax expense, $8, payable in 2011. Acct Account Title No. 101 Cash 102 Accounts receivable 103 Inventory 104 Land 105 Equipment 106 Accumulated depreciation 107 Other long-term assets 201 Accounts payable 202 Notes payable 203 Wages payable 204 Interest payable 205 Income taxes payable 301 Contributed capital (65,000 shares) 302 Retained earnings 401 Sales revenue 501 Cost of goods sold 502 Depreciation expense 503 504 Interest expense 505 SG&A expense Totals b C d e f 8 h Income tax expense i j k EGO G 3/1/10 4/5/10 7/1/10 7/15/10 8/1/10 9/1/10 9/15/10 10/1/10 10/15/10 10/31/10 12/15/10 DR 12/31/10 12/31/10 3 5 12/31/10 12/31/10 12/31/10 12 The following is a summary of transactions that occurred during 2010 (dollar amounts are in thousands): Date: 60 4 84 CR Information for year-end adjusting entries is as follows: 6 5 65 8 84 Borrowed $10, signing a 5 year, 12% note payable, dated March 1, 2010. Purchased land for a future building site, paying $9 cash. Sales for 2010 were $160, including $40 on account. Sold 3,000 additional shares of capital stock, and received a total of $3 cash. Incurred and paid $16 in advertising costs. Collected $24 on outstanding customer balances. Purchased other long-term assets for $10 cash. Purchased $87 of inventory on account. Paid trade vendors $13 of balance due. Signed a $25 contract to deliver furnishings to a new customer on Feb. 1, 2011. Declared and paid a $17 cash dividend. A physical count of inventory at Dec. 31, 2010 indicated a balance of $14. Depreciation on equipment, $6. Interest accrued on notes payable (show calculation). Wages earned after the Dec. 24, 2010 payroll, to be paid on Jan. 2, 2011, $12. Income tax expense, $8, payable in 2011.

Answer rating: 100% (QA)

To analyze and record the transactions and prepare the financial statements well follow these steps Step 1 Analyze and Record Transactions a On 3110 borrowed 10 signing a 5year 12 note payable dated M... View the full answer