The BouchonCompany started its operations many years ago. The balance sheet for December 31, 2017, showed the following account balances, in dollars (there were no other accounts listed):

Cash 827; 

Paid in capital 1,000; 

Loan from bank (0% interest) 800; 

Dividend payable 100; 

Accumulated depreciation 250;

 Inventory 300; 

Retained earnings 334; 

Accounts receivable 400; 

PP&E 1,500; 

Accounts payable 250;

 Wages payable 103;

Rent payable 30; 

Advances from customers 160;

During 2018the following transactions occurred:

Bouchon took another 0% interest loan from the bank, on January 1, 2018, in the amount of $600.

Purchases of inventory were $654 (all on credit), and payments to suppliers were $704.

A dividend in the amount of $168 was declared during 2018. On December 31, 2018, the Dividend payable account balance was $18.

The employees of Bouchon were paid $154, which was $8 more than what they earned during the year.

a. Total sales during 2018 were $1,435. Part of the sales relate to advances received during 2017. As of December 31, 2018, Bouchon has no more obligations related to advances from customers. Cash sales were $750, and credit sales were $525.

b. All current and past customers have paid their accounts in full by the end of the year.

Cost of Goods Sold exceeded purchases of inventory by $6.

Depreciation expense was $225.

The owner of Bouchon decided to take a second job, flipping burgers at the local McDonalds, for $60 a month, in order to cover their daughter’s tuition at an Ivy League University.

Rent expense for the year was $180; rent payments were $256 (all to the same landlord and for the office space to which the Rent payable balance on December 31^st, 2017 relates).

A fully depreciated machine, with an original cost of $210 and a salvage value of zero, was sold for $100, in cash.

Required:

1. Record all the transactions that occurred during 2018 (you may use the accounting equation method or journal entries).
2. Prepare an income statement for the year ended December 31, 2018.
3. Prepare a balance sheet for December 31, 2018.
4. Prepare a statement of cash flows for the year ended December 31, 2018 using the indirect metho

Answer rating: 100% (QA)

Here are the journal entries to record the transactions that occurred in 2018 1 Loan from bank Jan 1 Dr Cash 600 Cr Loan from bank 600 2 Purchase inve... View the full answer