Question

In: Accounting

McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells...

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 $ 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, 2019 35,000
Total cash receipts $ 430,000
Cash disbursements:
Purchase of merchandise $ 197,500
Payment of salaries and wages 77,500
Purchase of office equipment 42,000
Payment of rent on building 10,750
Miscellaneous expenses 12,500
Total cash disbursements $ 340,250


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 $19,500 at year-end.
  2. At year-end, $29,750 was still due to suppliers of merchandise purchased on credit.
  3. At year-end, merchandise inventory costing $47,000 still remained on hand.
  4. Salaries and wages owed to employees at year-end amounted to $5,250.
  5. 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.
  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 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.)

Solutions

Expert Solution

for formulas and calculations, refer to the image below -


Related Solutions

McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells...
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...
McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells...
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 $ 55,000 Collections from customers 295,000 Borrowed from local bank on April 1, note signed requiring principal and interest...
McGuire Corporation began operations in 2021. The company purchases computer equipment from manufacturers and then sells...
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...
Chapter 2, # 8 McGuire Corporation began operations in 2021. The company purchases computer equipment from...
Chapter 2, # 8 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 $ 52,500 Collections from customers 290,000 Borrowed from local bank on April 1, note signed...
University Wholesale Company purchases merchandise from a variety of manufacturers and sells the merchandise to a...
University Wholesale Company purchases merchandise from a variety of manufacturers and sells the merchandise to a variety of retail stores. All sales are subject to a cash discount (terms of 2/10, n/30). University uses a perpetual inventory system. The following transactions occurred during the month of February: Feb. 2—Purchased $18,600 of merchandise from Caroline Manufacturing; terms are 1/10, n/30. Feb. 5—Paid $750 freight bill for the February 2 purchase. Feb. 11—Paid Caroline for the February 2 purchase. Feb. 17—University receives...
Sage Creek Inc. began operations on 1/1/20. The company purchased $10,000 worth of computer equipment on...
Sage Creek Inc. began operations on 1/1/20. The company purchased $10,000 worth of computer equipment on August 1, and $50,000 worth of restaurant equipment on November 1. All of the equipment is 5 year property. Assuming that the company elects out of bonus depreciation and elects a Section 179 deduction of $10,000 on the restaurant equipment purchased in November. (a) compute the total depreciation expense including Section 179 for Gallagher for 2020. (b) compute the 2022 depreciation expense on the...
The Mann Corporation began operations in 2011. Information relating to the company's purchases of inventory and...
The Mann Corporation began operations in 2011. Information relating to the company's purchases of inventory and sales of products for 2011 and 2012 is presented below. 2011 February 1 Purchase 200 units @ $20 per unit May 1 Sold 120 units @ $50 per unit August 1 Purchase 100 units @ $28 per unit October 1 Sold 130 units @ $50 per unit 2012 February 1 Purchase 100 units @ $32 per unit May 1 Sold 80 units @ $60...
Sun Packaging Services began operations in January 2018.  The company received a prepayment of $16,000 from a...
Sun Packaging Services began operations in January 2018.  The company received a prepayment of $16,000 from a customer to provide packaging services at the beginning of 2019.  Sun Packaging also purchased packaging machinery for $60,000 on January 1. Sun Packaging plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2018, 30% in 2019, and 20% in 2020. Pretax accounting income for 2018 was $500,000, which includes...
Winx Company began operations at the beginning of 2018.The following information is available for this...
Winx Company began operations at the beginning of 2018. The following information is available for this company: • Pretax financial income for 2018 is $300,000. • Differences between the 2018 income statement and tax return include: - Depreciation on property, plant and equipment for financial reporting purposes was $20,000 lower than for tax purposes. - Gross profit on construction contracts using the percentage-of-completion method equaled $82,000 in the company’s books. Gross profit on construction contracts for tax purposes was $67,000....
The Flynn Corporation began operations on September 1, 20x3. On that date, equipment costing $84,000 was...
The Flynn Corporation began operations on September 1, 20x3. On that date, equipment costing $84,000 was purchased. Flynn estimated that the equipment’s useful life would be seven years and have a residual value of $24,500. Flynn also estimated that the equipment could be used for about 10,000 hours. It was used for 800 hours in 20x3 and 1,700 hours in 20x4. Required – Calculate depreciation expense for 20x3 and 20x4 under each of the following methods: a) Straight-line method. b)...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT