Question

Midwestem Reserve Rare Coins (MRRC) was formed on January 1, 2018. Additional data for the year follow: (Click the lcon view the data. More Info Read the requirements INEL ncome Requirement 3. Prepare MRRC's balance sheet at December 31, 2018. a. On January 1, 2018, MRRC issued no par oommon stock for $500,000 Midwestern Reserve Rare Coins January, MRRC made the following cash payments: ь. Early For store fixtures, S55,000 Balance Sheet 1. 2. For merchandise inventory, S310,000 For rent expense on a store building, $19,000 December 31, 2018 3. Assets Liabilities c. Later in the year, MRRC purchased merchandise inventory on account for Current Liabilities: Current Assets: e d 2 700 s accounts paya ach o'esze мр w d Before year-end, the company collected 80% of this amount. Cost of goods sold for the year was $310,000, and ending merchandise inventory totaled S235,000. e. The store employs three people. The combined annual payroll is $90,000, MRRC still owes $7,000 at year-end. which Total Current Liabilities Total Current Assets f. At the end of the year, MRRC paid income tax of $15,000. There are no income Stockholders' Equity g. Late in 2018, MRRC paid cash dividends of S41,000. Property, Plant, and Equipment: h. For store fixtures, MRRC uses the straight-line depreciation method, over five years, with zero residual value., Total Stockholders' Equity Print Done Total Assets Total Liabilities and Stockholders Equity Choose from any list or enter any number n the input fields and then click Check Answer.

Answer 1

Prepare the balance sheet as follows:

Midwestern Reserve Rare Coins Balance Sheet December 31, 2018 Liabilities Assets Current Liabilities: Current Assets: 372000 Accounts payable ($235,000 $145,000) 135000 Salaries payable 235000 Total Current Liabilities Cash 90000 - Accounts receivable ($250 x 2,700 x 20%) 7000 Merchandise inventories 97000 Total Current Assets 742000 Stockholders' Equity Property, Plant, and Equipment: Common stock 500000 Retained earnings Store fixtures 55000 189000 Accumulated depreciation ($55,000/5) 44000 Total Stockholders' Equity 11000 689000 Total Assets 786000 Total Liabilities and Stockholders' Equity 786000

Notes:

Balance of cash and retained earnings reported in the balance sheet have been calculated as follows:

Calculation of the ending balance of cash: Proceeds from issue of common stock 500000 Cash payment for store fixtures -55000 Cash payment for merchandise inventory -310000 Cash payment for rent expense -19000 Payment on accounts payable -145000 Collection from customers ($250 x 2,700 x 80%) 540000 X Salaries paid (90,000- 7,000) -83000 Income tax paid Cash dividends paid -15000 -41000 Ending balance of cash 372000 Calculation of the ending balance of retained earnings: Sales ($250 x 2,700) 675000 Less: Cost of goods sold 310000 Gross profit 365000 Less: Expenses Rent expense -19000 Salaries expense -90000 Depreciation expense -11000 Income tax expense -15000 Net income 230000 Less: Dividends -41000 Ending balance of retained earnings 189000