Question

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Required information The following information applies to the questions displayed below) The following post-closing trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31. 2017 $ $ Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common stock Retained earnings 5,719 17,410 1,640 24,760 7,695 21,280 17,345 Transactions for 2018 1. Acquired an additional $10,400 cash from the issue of common stock 2. Purchased $61,400 of inventory on account 3. Sold inventory that cost $62100 for $96,200. Sales were made on account. 4. The company wrote off $1,460 of uncollectible accounts 5. On September 1. LGS loaned $9,000 to Eden Co. The note had an 6 percent interest rate and a one-year term. 6. Paid $14,600 cash for operating expenses 7. The company collected $72,610 cash from accounts receivable. 8. A cash payment of $50.490 was paid on accounts payable. 9. The company paid a $4,500 cash dividend to the stockholders. 10. Uncollectible accounts are estimated to be 2 percent of sales on account. 11. Recorded the accrued interest at December 31, 2018 (see item 5)

Answer 1

+ + + + + + + + + + + + + + Little Grocery Supplier Accounting Equation Assets = Liabilties Stockholders Equity Event Cash + Accounts Rec - Allowance + Inventory + Notes Rec + Interest Rec = Accounts Payable + Common Stock + Retained Earnings Account titles for RE Calculation Bal. 5,710 + 17,410 - 1,640 + 24,760 + 7,695 + 21,200 + 17,345 1 10,400 + 10,400 + + 61,400 + 61,400 + 96,200 96,200 Sales (62,100) + (62,100) Cost of goods sold (1,460) - (1,460) (9,000) + 9,000 (14,600) + (14,600) Operating Expenses 72,610 + (72,610) - (50,490) + (50,490) + (4,500) + (4,500) Dividends 10 1,924 + (1,924) Bad debts expense =96,200*2% 180 Interest Revenue =9,000*6%*4/12 Bal. 10,130 + 39,540 - 2,104 + 24,060 + 9,000 + 180 = 18,605 + 31,600 + 30,601 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + 11 + + 180 = +

96,200 (62,100) 34,100 Little Grocery Supplier Income Statement For the Year Ended December 31, 2018 Sales revenue Cost of goods sold Gross margin Expenses Operating Expenses Bad debts expense Total Operating expenses Operating income Interest Revenue Net income (14,600) (1,924) (16,524) 17,576 180 17,756 21,200 10,400 31,600 Statement of Changes in Stockholders Equity For the Year Ended December 31, 2018 Beginning common Stock Stock issued Ending common Stock Beginning retained earnings Plus: Net income Less: Dividends paid Ending retained earnings Total Stockholders Equity 17,345 17,756 (4,500) 30,601 62,201

10,130 Little Grocery Supplier Balance Sheet As of December 31, 2018 Assets Current Assets Cash Accounts Receivable Allowance for doubtful accounts Accounts Receivable, Net Inventory Notes Receivable Interest Receivable Total Assets 39,540 (2,104) 37,436 24,060 9,000 180 80,806 Liabilities Current Liabilities Accounts Payable Total Liabilities 18,605 18,605 Stockholders Equity Common Stock Retained earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 31,600 30,601 62,201 80,806

Cashflow Statement - Direct method For the Year Ended December 31, 2018 Cashflows from Operating activities Cash received from customers Cash paid to creditors Cash paid for operating expenses Net Cashflows from Operating activities (50,490) (14,600) 7,520 Cashflows from Investing activities Loan given Net Cashflows from Investing activities (9,000) (9,000) 10,400 (4,500) Cashflows from Financing activities Proceeds from issue of shares Dividends paid Net Cashflows from Financing activities Net change in cash Beginning cash balance Ending cash balance 5,900 4,420 5,710 10,130