Reference no: EM133124870
Question - Trevor Company's balance sheet for December 31, 20X0 is as follows:
|
Cash
|
|
100
|
|
Accounts Receivable
|
|
200
|
|
Interest Receivable
|
|
25
|
|
Inventory
|
|
150
|
|
Notes Receivable (long term)
|
|
500
|
|
Equipment, at cost
|
400
|
|
|
Accumulated depreciation, Equipment
|
150
|
|
|
Equipment, net
|
|
250
|
|
Total assets
|
|
$1,225
|
|
|
|
|
|
Accounts payable
|
|
140
|
|
Wages payable
|
|
20
|
|
Unearned sales revenue
|
|
40
|
|
Paid-in-capital
|
|
600
|
|
Retained income
|
|
425
|
|
Total liabilities and stockholder's equity
|
|
$1,225
|
The following summarized transactions occurred during 20X1:
1. Purchased merchandise inventory on credit, $700.
2. Delivered merchandise to customers who had paid in advance as of December 31, 20X0.
3. Sales of merchandise (all on credit and excluding transaction b) during 20X1 were $3,000.
4. The cost of merchandise sold (including that in transaction b) during 20X1 was $900.
5. Collection from credit customers was $2,500.
6. Interest on notes receivable of 12% per annum was collected each August 1.
7. Cash payment to suppliers, $800 (see item: a)
8. Cash payment for wages during 20X1 was $250.
9. New equipment was purchased on December 10 for $300 in cash.
10. Cash dividend of $50 was declared on December 20, 20X1. The payment date of dividends was January 10, 20X2.
The following adjustments were made on December 31, 20X1:
1. Accrual of interest receivable (to be computed, see item f).
2. Depreciation for 20X1, $100
Required -
1. Analyze the above transactions. Use the balance sheet equation format (spread sheet).
2. Prepare income statement for the year 20X1. Assume that the company does not have to pay taxes.
3. Also prepare the statement of cash flows for 20X1. Use the direct method, i.e. list separately the cash inflow/outflow entries for operations, investing, and financing activities.