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
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
Required:
Prepare an income statement for 2016 and a

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