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Hudson Corporation’s balance sheet at December 31, 2016, is presented below. Hudson Corporation Balance Sheet December...

Hudson Corporation’s balance sheet at December 31, 2016, is presented below.

Hudson Corporation
Balance Sheet
December 31, 201

Hudson Corporation
Balance Sheet
December 31, 2016

Cash

 $ 13,100

Accounts payable

 $ 8,750

Accounts receivable

 19,780

Common stock

 20,000

Allowance for doubtful accounts

 ( 800 )

Retained earnings

 12,730

Inventory

 9,400
$ 41,480

$ 41,480

During January 2016, the following transactions occurred. Hudson Corporation uses the perpetual inventory method.

Jan. 1 Hudson Corporation accepted a 4-month, 8% note from Betheny Company in payment of Betheny’s $ 1,200 account.

Jan 3 Hudson Corporation wrote off as uncollectible the accounts of Walter Corporation ($ 450) and Drake Company ($ 280).

Jan 8 Hudson Corporation purchased $ 17,200 of inventory on account.

Jan 11 Hudson Corporation sold for $ 25,000 on account inventory that cost $ 17,500.

Jan 15 Hudson Corporation sold inventory that cost $ 700 to Jack Rice for $ 1,000. Rice charged this amount on his Visa First Bank card. The service fee charged Hudson Corporation by First Bank is 3%.

Jan 17 Hudson Corporation collected $ 22,900 from customers on account.

Jan 21 Hudson Corporation paid $ 16,300 on accounts payable.

Jan 24 Hudson Corporation received payment in full ($ 280) from Drake Company on the account written off on January 3.

Jan 27 Hudson Corporation purchased advertising supplies for $ 1,400 cash.

Jan 31 Hudson Corporation paid other operating expenses, $ 3,218.

Adjustment data:

1. Interest is recorded for the month on the note from January 1.

2. Bad debts are expected to be 6% of the January 31, 2017, accounts receivable.

3. A count of advertising supplies on January 31, 2017, reveals that $ 560 remains unused.

4. The income tax rate is 30%. (Hint: Prepare the income statement up to “Income before taxes” and multiply by 30% to compute the amount; round to whole dollars.)

Prepare an income statement

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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