Question

In: Accounting

Sage Inc. experienced the following transactions for 2018, its first year of operations: Issued common stock...

Sage Inc. experienced the following transactions for 2018, its first year of operations:

  1. Issued common stock for $110,000 cash.
  2. Purchased $205,000 of merchandise on account.
  3. Sold merchandise that cost $164,000 for $326,000 on account.
  4. Collected $292,000 cash from accounts receivable.
  5. Paid $185,000 on accounts payable.
  6. Paid $54,000 of salaries expense for the year.
  7. Paid other operating expenses of $70,000.
  8. Sage adjusted the accounts using the following information from an accounts receivable aging schedule:
Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance
Current $ 20,400 0.01
0–30 8,500 0.05
31–60 1,700 0.10
61–90 1,700 0.20
Over 90 days 1,700 0.50

a. Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. If there is no effect on the Accounts Titles for Retained Earnings, leave the cell blank.)

SAGE INC.
Accounting Equation for the Year 2018
Event Assets = Liabilities + Equity Accounts Titles for Retained Earnings
Cash + Accounts Receivable Allowance + Merchandise Inventory = Accounts Payable + Common Stock = Retained Earnings
1. not attempted + not attempted not attempted + not attempted = not attempted + not attempted = not attempted not attempted
2. not attempted + not attempted not attempted + not attempted = not attempted + not attempted = not attempted not attempted
3a. not attempted +not attempted not attempted –not attempted not attempted +not attempted not attempted =not attempted not attempted +not attempted not attempted =not attempted not attempted not attempted
3b. not attempted +not attempted not attempted –not attempted not attempted +not attempted not attempted =not attempted not attempted +not attempted not attempted =not attempted not attempted not attempted
4. not attempted + not attempted not attempted + not attempted = not attempted + not attempted = not attempted not attempted
5. not attempted + not attempted not attempted + not attempted = not attempted + not attempted = not attempted not attempted
6. not attempted + not attempted not attempted + not attempted = not attempted + not attempted = not attempted not attempted
7. not attempted + not attempted not attempted + not attempted = not attempted + not attempted = not attempted not attempted
8. not attempted + not attempted not attempted + not attempted = not attempted + not attempted = not attempted not attempted
Bal. 0 + 0 0 + 0 = 0 + 0 = 0
  1. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Sage Inc. for 2018.

SAGE INC.
Income Statement
For the Year Ended 2018
not attempted not attempted
not attempted not attempted
not attempted not attempted
Operating expenses
not attempted not attempted
not attempted not attempted
not attempted not attempted
not attempted not attempted
Total operating expenses 0
not attempted
SAGE INC.
Statement of Changes in Stockholders’ Equity
For the Year Ended 2018
Beginning common stock not attempted
not attempted not attempted
Ending common stock $0
Beginning retained earnings not attempted
not attempted not attempted
Ending retained earnings 0
Total stockholders’ equity $0

Solutions

Expert Solution

Accounting Equation -

Accounting Equation is the relation of Assets with Stakeholder's Equity and Liabilities. Every Accounting transaction should balance the equation. Every transaction has double entry effect once in debit side of the financial statetement and another in credit side of the financial statement.

a. Accounting Equation in the question -

a.2 Sage adjusted the accounts using the following information from an accounts receivable aging schedule:

b. Income Statement -

c. Statement of Stockholder's Equity -

d. Balance Sheet -


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