Question

Exercise 3-9 (Static) Balance sheet preparation (LO3-2, 3-3] The following is the balance sheet of Korver Supply Company at December 31. 2020 (prior year). 6.25 points 8 02:52:31 KORVER SUPPLY COMPANY Balance Sheet At December 31, 2020 Assets Cash Accounts receivable Inventory Furniture and fixtures (net) Total assets Liabilities and Shareholders' Equity Accounts payable (for merchandise) Notes payable Interest payable Common stock Retained earnings Total liabilities and shareholders' equity $120,000 300,000 200,000 150,000 $770,000 eBook Print References $190,000 200,000 6,000 100,000 274,000 $770,000 Transactions during 2021 (current year) were as follows: 1. Sales to customers on account 2. Cash collected from customers 3. Purchase of merchandise on account 4. Cash payment to suppliers 5. Cost of merchandise sold 6. Cash paid for operating expenses 7 rachnoid for interest on nntas $800,000 780,000 550,000 560,000 500,000 160,000 12 AAA

Answer 1

		Balance sheet
					$	$
		Assets
Current assets:
Cash				(Note:1)	168000
Accounts receivable				(Note:2)	320000
Inventory				(Note:3)	250000
Total current assets						738000
Property,plant and equipment:
Furniture and fixtures			(Original cost)		300000
Accumulated depreciation				(Note:4)	170000
Net property,plant and equipment						130000
Total assets						868000
	Liabilities and shareholder's equity
Current liabilities:
Accounts payable				(Note:5)	180000
Notes payable		(Due next year)			200000
Interest payable				(Note:6)	6000
Total current liabilities						386000
Shareholder's equity:
Common stock					100000
Retained earnings				(Note:7)	382000
Total shareholder's equity						482000
Total liabilities and shareholder's equity						868000
Note:1
		Cash
				$	$
Beginning balance					120000
Add: Cash collected from customers					780000
					900000
Less:
Cash payment to suppliers				560000
Cash paid for operating expenses				160000
Cash paid for interest on notes				12000	732000
Ending balance					168000
Note:2
		Accounts receivable
					$
Beginning balance					300000
Add: Sales to customers on account					800000
					1100000
Less: Cash collected from customers					780000
Ending balance					320000
Note:3
		Inventory
					$
Beginning balance					200000
Add: purchase of marchandise on account					550000
					750000
Less: Cost of merchandise sold					500000
Ending balance					250000
Note:4
Furniture and fixtures (net)=Furniture and fixtures (at original cost)-Accumulated depreciation
150000=300000-Accumulated depreciation
Accumulated depreciation (beginning balance)=300000-150000=$ 150000
Accumulated depreciation (ending balance)=Beginning balance+CY depreciation=150000+20000=$ 170000
Note:5
		Accounts payable
					$
Beginning balance					190000
Add: Purchase of merchandise on account					550000
					740000
Less: Cash payment to suppliers					560000
Ending balance					180000
Note:6
		Interest payable
					$
Beginning balance					6000
Add: Interest expense for the year				(200000*6%)	12000
					18000
Less: Cash paid for interest					12000
Ending balance					6000
Note:7
		Retained earnings
					$
Beginning balance					274000
Add: Net income				(Note:8)	108000
Ending balance					382000
Note:8
Net income:
				$	$
Sales revenue					800000
Less: Cost of merchandise sold					500000
Gross profit					300000
Less:
Operating expenses				160000
Interest expenses				12000
Depreciation expense				20000	192000
Net income					108000