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	$	67,500
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		34,000
Total cash receipts	$	421,500
Cash disbursements:
Purchase of merchandise	$	195,000
Payment of salaries and wages		76,000
Purchase of office equipment		40,500
Payment of rent on building		10,500
Miscellaneous expenses		12,200
Total cash disbursements	$	334,200

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 $19,000 at year-end.
2. At year-end, $29,400 was still due to suppliers of merchandise purchased on credit.
3. At year-end, merchandise inventory costing $46,400 still remained on hand.
4. Salaries and wages owed to employees at year-end amounted to $5,100.
5. On December 1, $3,150 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.

Prepare an income statement for 2018 and a balance sheet as of December 31, 2018. (For Balance Sheet only, items to be deducted must be indicated with a negative amount.)

Answer 1

The Following is income statement and Balance Sheet for 2018.

Interest on Bank loan calculation:

The following is TB for preparation of Financials above.

Adjusted Trial Balance as on December 31, 2018
Accounts	Debit (Credit)	Type
Office Equipment	40,500	Assets
AR	19,000	Assets
Cash	68,300	Assets
Inventory	46,400	Assets
Prepaid Rent	2,100	Assets
Accumulated Depreciation on Office Equipment	(4,050)	Assets
Bank loan	(34,000)	Liability
Salaries and Wages Payable	(5,100)	Liability
Accrued Interest	(3,060)	Liability
Common Stock	(67,500)	Equity
Sale	(320,000)	Revenue
Purchase	148,600	Expenses
Salaries and Wages	81,100	Expenses
Rent	8,400	Expenses
Misc. Expense	12,200	Expenses
Depreciation on Office Equipment	4,050	Expenses
Interest	3,060	Expenses
Total	-