Question

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 requiring
principal and interest at 12% to be paid on March 31, 2022		28,000
Total cash receipts	$	370,500
Cash disbursements:
Purchase of merchandise	$	180,000
Payment of salaries		67,000
Purchase of office equipment		31,500
Payment of rent on building		9,000
Miscellaneous expense		10,400
Total cash disbursements	$	297,900

You are called in to prepare financial statements at December 31, 2021. The following additional information was provided to you:

1. Customers owed the company $16,000 at year-end.
2. At year-end, $27,300 was still due to suppliers of merchandise purchased on credit.
3. At year-end, merchandise inventory costing $42,800 still remained on hand.
4. Salaries owed to employees at year-end amounted to $4,200.
5. On December 1, $2,100 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, 2021. Straight-line depreciation is used.

Required:

Prepare an income statement for 2021.

	McGUIRE CORPORATION Income Statement For the Year Ended December 31, 2021 Sales revenue       Cost of goods sold Gross profit 0 Operating expenses Salaries expense Rent expense 0 0 0 $0

Prepare the balance sheet as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

	McGUIRE CORPORATION Balance Sheet At December 31, 2021 Assets    0 $0 Liabilities and Shareholders' Equity 0 0 $0

Answer 1