S McGuire Corporation began operations in 2013. The manufacturers and then sells to retail stores. During 2013, 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 ordinary shares Collections from customers Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2014 Total cash receipts Cash disbursements: Purchase of merchandise Payment of salaries Purchase of equipment Payment of rent on building Miscellaneous expenses Total cash disbursements $ 50,000 320,000 40,000 $410,000 $220,000 80,000 30,000 14,000 10,000 $354,000 You are called in to prepare financial statements at December 31, 2013. The following additional information was provided to you: 1. Customers owed the company $22,000 at year-end. Of this amount, it was anticipated that $3,000 would probably not be collected. There were no actual bad debt write-offs in 2013. 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 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 equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2013. Straight-line depreciation is used. Required: Prepare an income statement for 2013 and a statement of financial position as of December 31, 2013.
S McGuire Corporation began operations in 2013. The manufacturers and then sells to retail stores. During 2013, 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 ordinary shares Collections from customers Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2014 Total cash receipts Cash disbursements: Purchase of merchandise Payment of salaries Purchase of equipment Payment of rent on building Miscellaneous expenses Total cash disbursements $ 50,000 320,000 40,000 $410,000 $220,000 80,000 30,000 14,000 10,000 $354,000 You are called in to prepare financial statements at December 31, 2013. The following additional information was provided to you: 1. Customers owed the company $22,000 at year-end. Of this amount, it was anticipated that $3,000 would probably not be collected. There were no actual bad debt write-offs in 2013. 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 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 equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2013. Straight-line depreciation is used. Required: Prepare an income statement for 2013 and a statement of financial position as of December 31, 2013.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:McGuire Corporation began operations in 2013. The company purchases computer equipment from
ounting:
manufacturers and then sells to retail stores. During 2013, the bookkeeper used a check register to record all cash
tements receipts and cash disbursements. No other journals were used. The following is a recap of the cash receipts and
disbursements made during the year.
LOS
Cash receipts:
Issue of ordinary shares
Collections from customers
Borrowed from local bank on April 1, note signed requiring
principal and interest at 12% to be paid on March 31, 2014
Total cash receipts
Cash disbursements:
Purchase of merchandise
Payment of salaries
Purchase of equipment
Payment of rent on building
Miscellaneous expenses
Total cash disbursements
$ 50,000
320,000
40,000
$410,000
$220,000
80,000
30,000
14,000
10,000
$354,000
You are called in to prepare financial statements at December 31, 2013. The following additional information
was provided to you:
1. Customers owed the company $22,000 at year-end. Of this amount, it was anticipated that $3,000 would
probably not be collected. There were no actual bad debt write-offs in 2013.
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 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 equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2013.
Straight-line depreciation is used.
Required:
Prepare an income statement for 2013 and a statement of financial position as of December 31, 2013.
cash basis. At the end of each year the company's
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