Reference no: EM132188537

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	$50,000
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, 2019	40,000
Total cash receipts	$410,000
Cash disbursements:
Purchase of merchandise	$220,000
Payment of salaries and wages	80,000
Purchase of office equipment	30,000
Payment of rent on building	14,000
Miscellaneous expenses	10,000
Total cash disbursements	$354,000

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 $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 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, 2018 Straight-line depreciation is used

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