Question

McGuire Corporation began operations in 2021. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2021 , 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. $ 47,500 285, eee 27,600 $ 359,589 Cash receipts: Issue of common stock Collections from customers Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2022 Total cash receipts Cash disbursements: Purchase of merchandise Payment of salaries Purchase of office equipment Payment of rent on building Miscellaneous expense Total cash disbursements $ 177,500 65,500 28,500 8.750 10.100 $ 298,350 You are called in to prepare financial statements at December 31, 2021. 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 owed to employees at year-end amounted to $4.050. 5. On December 1. $1.950 in rent was paid to the owner of the building used by McGulre. This represented rent for the months of December through February 6. The office equipment, which has a 10-year life and no salvage value. was purchased on January 1, 2021. Straight-line depreciation is used. Required: Prepare an Income statement for 2021 and a balance sheet as of December 31, 2021. Complete this question by entering your answers in the tabs below. Income Statement Balano Sheet Prepare an income statement for 2021. McGUIRE CORPORATION Income Statement For the Year Ended December 31, 2021 Income Statement Balance Sheet >

Answer 1

MCGUIRE CORPORATION

Income Statement

For the Year Ending December 31,2021

Particulars	Amount	Amount
Sales		300,500
Less : Cost of Goods Sold		162,250
Gross Profit		138,250
Expenses
Salaries Expense	69,550
Rent Expense	7,450
Depreciation Expense	2,850
Miscellaneous Expense	10,100
Total Operating Expenses		89,950
Profit Before Interest		48,300
Less : Interest Expense		2,430
Net Income		45,870

Supporting Work

Sales = 285,000 + 15,500 ( Accounts Receivables ) = $ 300,500

Interest Expense = 27,000 * 12% * 9/12 = $ 2,430

Depreciation Expense = Cost of Asset - Salvage Value / Useful Life in Years

Depreciation Expense = 28,500 - 0 / 10 = $ 2,850

Rent Expense = 8,750 - Prepaid Rent

Rent Expense = 8,750 - 1,300 = $ 7,450

Prepaid Rent = 1,950 / 3 Months = $ 650

Prepaid Rent for 2 Months = 650 * 2 = $ 1,300

Salaries Exoense = 65,500 + 4,050 (Outstanding) = $ 69,550

Cost of Goods Sold = 177,500 + 26,950 (Accounts Payables) - 42,200 (Closing Inventory)

Cost of Goods Sold = $ 162,250

MCGUIRE CORPORATION

Balance Sheet

As at December 31,2021

Particulars	Amount	Amount
Assets
Current Assets
Cash	69,150
Accounts Receivable	15,500
Inventory	42,200
Prepaid Rent	1,300
Total Current Assets		128,150
Non Current Assets
Equipment	28,500
Accumulated Depreciation	(2,850)
Total Non Current Assets		25,650
Total Assets		153,800
Liabilities and Equity
Liabilities
Current Liabilities
Accounts Payables	26,950
Salaries Payable	4,050
Interest Payable	2,430
Notes Payables	27,000
Total Current Liabilities		60,430
Total Liabilities		60,430
Equity
Common Stock	47,500
Retained Earnings	45,870
Total Equity		93,370
Total Liabilities and Equity		153,800

Supporting Work

Total Assets = Total Current Assets + Total Total Non Current Assets

Total Liabilities and Equity = Total Liabilities + Total Equity

Retained Earnings = Net Income for the Year Calculated in Income Statement.