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.
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Cash receipts:
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Sale of common stock
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$50,000
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Collections from customers
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320,000
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Borrowed from local bank on April 1 note signed requiring principal and interest at 12% to be paid on March 31, 2019
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40,000
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Total cash receipts
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$410,000
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Cash disbursements:
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Purchase of merchandise
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$220,000
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Payment of salaries and wages
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80,000
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Purchase of office equipment
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30,000
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Payment of rent on building
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14,000
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Miscellaneous expenses
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10,000
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Total cash disbursements
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$354,000
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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.