Reference no: EM132193343

Question - McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2018, 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: Sale of common stock$70,000 Collections from customers 325,000 Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2019 35,000 Total cash receipts$430,000 Cash disbursements: Purchase of merchandise$197,500 Payment of salaries and wages 77,500 Purchase of office equipment 42,000 Payment of rent on building 10,750 Miscellaneous expenses 12,500 Total cash disbursements$340,250

You are called in to prepare financial statements at December 31, 2018. The following additional information was provided to you:

1. Customers owed the company $19,500 at year-end.

2. At year-end, $29,750 was still due to suppliers of merchandise purchased on credit.

3. At year-end, merchandise inventory costing $47,000 still remained on hand.

4. Salaries and wages owed to employees at year-end amounted to $5,250.

5. On December 1, $3,300 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, 2018. Straight-line depreciation is used.

Required: Prepare income statement for 2018 and a balance sheet as of December 31, 2018.