Comprehensive single-cycle problem
The following post-closing trial balance was drawn from the accounts of Spruce Timber Co. as of December 31, 2012.
| Debit | Credit |
Cash | $ 6,000 |
|
Accounts receivable | 18,000 |
|
Allowance for doubtful accounts |
| $ 2,000 |
Inventory | 24,000 |
|
Accounts payable |
| 9,200 |
Common stock |
| 20,000 |
Retained earnings |
| 16,800 |
Totals | $48,000 | $48,000 |
Transactions for 2013
1. Acquired an additional $10,000 cash from the issue of common stock.
2.Purchased $60,000 of inventory on account.
3. Sold inventory that cost $62,000 for $95,000. Sales were made on account.
4. Wrote off $1,100of uncollectible accounts.
5. On September 1, Spruce loaned $9,000 to Pine Co. The note had a 7 percent interest rate and a one-year term.
6. Paid $15,800 cash for salaries expense.
7. Collected $80,000 cash from accounts receivable.
8. Paid $52,000 cash on accounts payable.
9. Paid a $5,000 cash dividend to the stockholders.
10. Estimated uncollectible accounts expense to be 1 percent of sales on account.
11. Recorded the accrued interest at December 31,2013.
Required
a.Organize the transaction data in accounts under on accounting equation.
b.Prepare an income statement, a statement of changes in stockholders’ equity, a balance sheet, and a statement of cash flows for 2013.
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