Question

This window shows your responses and what was marked correct and incorrect from your previous attempt. Raintree Corporation maintains its records on a cash basis. At the end of each year the company's accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred during the year ended December 31, 2021 ed $510,000 3,720 50.000 $563,720 Cash receipts Pron customers Interest on note Issue of common stock Total cash receipts Cash disbursements: Purchase of merchandise Annual insurance payment Payment of salaries Dividends paid to shareholders Annual rent payment Total cash disbursements $232,000 9,000 192,000 8.000 12.000 $453,000 Selected balance sheet information: 12/31/2020 $ 37,000 54,000 72,000 3.000 8,000 Cash Accounts receivable Inventory Prepaid insurance Prepaid rent Interest receivable Sote receivable Ement Accumulated depreciation equipment Accounts payable for merchandise Salaries payable Common stock Dividends 62,000 174,000 (52,000) 62.000 32,000 320,000 12/31/2021 $113,000 94.000 106,000 2 ? 62.000 174,000 179.0001 52.000 370.000 11,000 Additional information og Dl DO 741 A & * ) 3 % 5 4 6 7 8 ( 9 0 E R T T Y U OP { [ D F G H J K L X C V B NM ?

Answer 1

1) $550,000 ($510,000+ $94,000 - $54,000 --> Ref: Accounts receivable] $222,000 (Ref: Workings] $328,000 RAINTREE CORPORATION Income Statement For The Year Ended December 31, 2021 Sales revenue Cost of goods sold Gross profit Operating expenses: Insurance expense $9,750 Salaries expense $212,000 Rent expense $11,000 Depreciation expense $27,000 Blank $0 Blank $0 Operating income Interest revenue Net income ($3,000 + ($9,000 x 9/12) --> Ref: Prepaid insurance) [$52,000 + $192,000 - $32,000 -->Ref: Salaries payable] [$8,000 + ($12,000*3/12) --> Ref: Prepaid rent] ($79,000 - $52,000 --> Ref: Accumulated dep. account] $259,750 $68,250 $1,860 [$62,000 x 6% < (6/12) --> 6 months' interest from Jul.1 thru Dec. 31] $70,110

2) Balance sheet items on December 31, 2021: a) Interest receivable b) Prepaid insurance c) Prepaid rent $1,860 [As calculated for income statement in Part-1] $2,250 ($9,000 x 3/12 --> 3 months' prepaid for Jan. 1 thru Mar 31 of 2022] $9,000 ($12,000 x 9/12 --> 9 months' prepaid for Jan. 1 thru Sep 30 of 2022] Workings: Accounts payable, ending balance Add: Payment for merchandise Less: Accounts payable, beginning balance Merchandise purchased Add: Inventory, beginning balance Less: Inventory, ending balance Cost of goods sold $86,000 $232,000 -$62,000 $256,000 $72,000 -$106,000 $222,000