Question

McGuire Corporation began operations in 2018. Th e 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 common stock $ 55,000 Collections from customers 295,000 Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2019 29,000 Total cash receipts $ 379,000 Cash disbursements: Purchase of merchandise $ 182,500 Payment of salaries and wages 68,500 Purchase of office equipment 33,000 Payment of rent on building 9,250 Miscellaneous expenses 10,700 Total cash disbursements $ 303,950 You are called in to prepare financial statements at December 31, 2018. The following additional information was provided to you: Customers owed the company $16,500 at year-end. At year-end, $27,650 was still due to suppliers of merchandise purchased on credit. At year-end, merchandise inventory costing $43,400 still remained on hand. Salaries and wages owed to employees at year-end amounted to $4,350. On December 1, $2,250 in rent was paid to the owner of the building used by McGuire. This represented rent for the months of December through February. The office equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2018. Straight-line depreciation is used. Required: Prepare an income statement for 2018 and a balance sheet as of December 31, 2018. (For Balance Sheet only, items to be deducted must be indicated with a negative amount.)