The following trial balance was prepared for Tile, Etc., Inc. on December 31, 2017, after the closing entries were posted:
Account Title
Cash………………………………………………………..$110,000
Accounts Receivable………………………………………..125,000
Allowance for Doubtful Accounts……………………………18,000
Inventory……………………………………………………425,000
Accounts Payable…………………………………………….95,000
Common Stock………………………………………………450,000
Retained Earnings……………………………………………97,000
Tile, Etc. had the following transactions in 2018:
1. Purchased merchandise on account for $580,000.
2. Sold merchandise that cost $420,000 for $890,000 on account.
3. Sold for $245,000 cash merchandise that had cost $160,000.
4. Sold merchandise for $190,000 to credit card customers. The merchandise had cost $96,000. The credit card company charges a 4 percent fee.
5. Collected $620,000 cash from accounts receivable.
6. Paid $610,000 cash on accounts payable.
7. Paid $145,000 cash for selling and administrative expenses.
8. Collected cash for the full amount due from the credit card company (see item 4).
9. Loaned $60,000 to J. Parks. The note had an 8 percent interest rate and a one-year term to maturity.
10. Wrote off $7,500 of accounts as uncollectible.
11. Made the following adjusting entries:
(a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account.
(b) Recorded seven months of accrued interest on the note at December 31, 2018 (see item 9).
Required
a. Organize the transaction data in accounts under an accounting equation.
b. Prepare an income statement, a statement of changes in stockholders’ equity, a balance sheet, and a statement of cash flows for 2018.
Enjoy 24/7 customer support for any queries or concerns you have.
Phone: +1 213 3772458
Email: support@gradeessays.com