Problem $10-1$

A Challenging Cash Flow Problem$-$

The following balances are from the beginning of the year for Dezie Company as of December $31,20$X$0$:

$\backslash$table$[[$Cash$,125,000],[$Accounts Receivable,$40,000],[$Allowance for Doubtful Accts,$2,000],[$Inventory$,45,000(5$ Jumbles$)],[$Prepaid Rent,$3,000],[$Equipment$,240,000],[$Accumulated Depreciation,$80,000],[$Security Deposit,$10,000],[$Accounts Payable,$92,000],[$Wages Payable,$5,000],[$Interest Payable,$5,000],[$Taxes Payable,$8,000],[$Note Payable,$100,000],[$Common Stock $($$$1$ each$),60,000],[$Retained Earnings,$111,000]]$

For $20$X$1$:

Received all beginning accounts receivable and paid all beginning accounts payable Bought six Jumbles at $$20,000$ each, $20\%$ down, rest next year Sold eight Jumbles, $$40,000$ each, $60\%$ down, $40\%$ next year Paid cash wages of $$40,000$ and at the end of the year owed employees $$2,000$ Paid utilities of $$12,000$ and advertising of $$10,000.$

On June ${30}^{st},$ they paid the annual payment of $$10,000$ principal plus interest on the Note Payable. The note was taken out on June ${30}^{th}$ of the previous year.

$($Can you figure out the interest rate?$)$

On August $1,$ purchased a new wagon for delivery of the Jumbles for $$20,000.$

On December $1,$ they declared and paid a dividend of $$7,000.$

On December $31,$ the company borrowed $$75,000$ from the bank and used the proceeds to purchase a piece of land. The note is payable in five years. The interest at $6\%$ is payable annually on December $31$ of each year starting in $20$X$1.$

During the year they paid $$7,000$ in rent $($rent is $$1,000$ per month$)$

The company uses the FIFO inventory flow assumption

The depreciation for the year was $$40,000$

The company estimates that $4\%$ of its accounts receivable will never be collected. During the year the company wrote off $$1,500$ in bad accounts.

The tax rate is $30\%.$ During the year the company paid all of last year's taxes and $50\%$ of $20x1$ taxes.

Prepare Journal Entries, T$-$Accounts, and Financial Statements for the year $20$X$1.$