Question

McGuire Corporation began operations in 2021. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2021, 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: Issue of common stock $ 70,000 Collections from customers 325,000 Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2022 35,000 Total cash receipts $ 430,000 Cash disbursements: Purchase of merchandise $ 197,500 Payment of salaries 77,500 Purchase of office equipment 42,000 Payment of rent on building 10,750 Miscellaneous expense 12,500 Total cash disbursements $ 340,250 You are called in to prepare financial statements at December 31, 2021. The following additional information was provided to you: Customers owed the company $19,500 at year-end. At year-end, $29,750 was still

due to suppliers of merchandise purchased on credit. At year-end, merchandise inventory costing $47,000 still remained on hand. Salaries owed to employees at year-end amounted to $5,250. On December 1, $3,300 in rent was paid to the owner of the building used by McGuire. This represented rent for the months of December through February. The office equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2021. Straight-line depreciation is used.

Answer 1