McGuire Corporation began operations in 2024. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2024, 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: Issue of common stock $ 37,500 Collections from customers 265,000 Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2025 23,000 Total cash receipts $ 325,500 Cash disbursements: Purchase of inventory $ 167,500 Payment of salaries 59,500 Purchase of office equipment 22,500 Payment of rent on building 7,750 Miscellaneous expense 8,900 Total cash disbursements $ 266,150 You are called in to prepare financial statements on December 31, 2024. The following additional information was provided to you: Customers owed the company $13,500 at year-end. At year-end, $25,550 was still due to suppliers of inventory purchased on credit. At year-end, inventory costing $39,800 still remained on hand. Salaries owed to employees at year-end amounted to $3,450. On December 1, $1,350 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 ten-year life and no salvage value, was purchased on January 1, 2024. Straight-line depreciation is used. Required: Prepare an income statement for 2024 and a balance sheet as of December 31, 2024.

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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McGuire Corporation began operations in 2024. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2024, 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:
Issue of common stock	$ 37,500
Collections from customers	265,000
Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2025	23,000
Total cash receipts	$ 325,500
Cash disbursements:
Purchase of inventory	$ 167,500
Payment of salaries	59,500
Purchase of office equipment	22,500
Payment of rent on building	7,750
Miscellaneous expense	8,900
Total cash disbursements	$ 266,150

You are called in to prepare financial statements on December 31, 2024. The following additional information was provided to you:

Customers owed the company $13,500 at year-end.
At year-end, $25,550 was still due to suppliers of inventory purchased on credit.
At year-end, inventory costing $39,800 still remained on hand.
Salaries owed to employees at year-end amounted to $3,450.
On December 1, $1,350 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 ten-year life and no salvage value, was purchased on January 1, 2024. Straight-line depreciation is used.

Required:

Prepare an income statement for 2024 and a balance sheet as of December 31, 2024.

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