Question

McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2018, the bookkeeper used a check register to record all cash receipts and cash disbursements. No other journals were used. The following is a recap of the cash receipts and disbursements made during the year Cash receipts: Sale of coemon stock Collections from customers Borrowed from local bank on April 1, note signed requiring s 47,580 285,0a principal and interest at 12% to be paid on March 31, 2019 27,000 Total cash receipts $359,588 Cash disbursements: Purchase of merchandise Payment of salaries and wages Purchase of office equipment Payment of rent on building Miscellaneous expenses $177,500 65,508 28,500 8,758 10,100 $290,350 Total cash disbursements You are caled in to prepare financial statements at December 31. 2018. The following additional information was provided to you 1. Customers owed the company $15,500 at year-end 2. At year-end. $26.950 was still due to suppliers of merchandise purchased on credit 3. At year-end. merchandise inventory costing $42.200 still remained on hand 4. Salaries and wages owed to employees at year-end amounted to $4.050 5. On December 1 $1950 in rent was paid to the owner of the building used by McGuire This represented rent for the months of December through February 6. The office equipment, which has a 10-year Ife and no salvage value. was purchased on January 1: 2018 Straightiline depreciation is used. Required: epare an income statement for 2018 and s balance sheet as ot Decenmber 31.:2018 (for Balance Sheet only, Items to be deducted Prav HP Support 1-800-4

Answer 1

McGUIRE CORPORATION
Income Statement
For the Year Ended December 31, 2018
Sales revenue ($285000 + $15500)		300500
Cost of goods sold ($177500 + $26950 - $42200)		162250
Gross profit		138250
Operating expenses
Salaries and wages expense ($65500 + $4050)	69550
Rent expense [$8750 - ($1950 x 2/3)]	7450
Miscellaneous expense	10100
Depreciation expense	2850
Total operating expenses		89950
Operating income		48300
Other income and expense
Interest expense ($27000 x 12% x 9/12)		2430
Net income		45870

McGUIRE CORPORATION
Balance Sheet
At December 31, 2018
Assets
Current assets
Cash ($359500 - $290350)	69150
Accounts receivable	15500
Inventory	42200
Prepaid rent ($1950 x 2/3)	1300
Total current assets		128150
Property and equipment
Office equipment	28500
Accumulated depreciation	-2850	25650
Total assets		153800
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	26950
Salaries and wages payable	4050
Note payable	27000
Interest payable	2430
Total current liabilities		60430
Shareholders' Equity
Common stock	47500
Retained earnings	45870
Total shareholders' equity		93370
Total liabilities and shareholders' equity		153800