You are called in to prepare financial statements at December 31, 2016. The following additional informationwas provided to you:1. Customers owed the company $22,000 at year-end.2. At year-end, $30,000 was still due to suppliers of merchandise purchased on credit.3. At year-end, merchandise inventory costing $50,000 still remained on hand.4. Salaries and wages owed to employees at year-end amounted to $5,000.5. On December 1, $3,000 in rent was paid to the owner of the building used by McGuire. This represented rentfor the months of December through February.6. The office equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2016.Straight-line depreciation is used.Required:Prepare an income statement for 2016 and a balance sheet as of December 31, 2016. McGuire Corporation began operations in 2016. The company purchases computer equipment from manufactur-ers and then sells to retail stores. During 2016, the bookkeeper used a check register to record all cash receiptsand cash disbursements. No other journals were used. The following is a recap of the cash receipts and disburse-ments made during the year.Cash receipts:$ 50,000Sale of common stockCollections from customers320,000Borrowed from local bank on April 1, note signed requiringprincipal and interest at 12% to be paid on March 31, 201740,000Total cash receipts$410,000Cash disbursements:$220,000Purchase of merchandisePayment of salaries and wagesPurchase of office equipmentPayment of rent on buildingMiscellaneous expenses80,00030,00014,00010,000Total cash disbursements$354,000

Answered: McGuire Corporation began operations in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are called in to prepare financial statements at December 31, 2016. The following additional information
was provided to you:
1. Customers owed the company $22,000 at year-end.
2. At year-end, $30,000 was still due to suppliers of merchandise purchased on credit.
3. At year-end, merchandise inventory costing $50,000 still remained on hand.
4. Salaries and wages owed to employees at year-end amounted to $5,000.
5. On December 1, $3,000 in rent was paid to the owner of the building used by McGuire. 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, 2016.
Straight-line depreciation is used.
Required:
Prepare an income statement for 2016 and a balance sheet as of December 31, 2016.

McGuire Corporation began operations in 2016. The company purchases computer equipment from manufactur-
ers and then sells to retail stores. During 2016, 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 disburse-
ments made during the year.
Cash receipts:
$ 50,000
Sale of common stock
Collections from customers
320,000
Borrowed from local bank on April 1, note signed requiring
principal and interest at 12% to be paid on March 31, 2017
40,000
Total cash receipts
$410,000
Cash disbursements:
$220,000
Purchase of merchandise
Payment of salaries and wages
Purchase of office equipment
Payment of rent on building
Miscellaneous expenses
80,000
30,000
14,000
10,000
Total cash disbursements
$354,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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