152 Accounts Receivable Homework Problem 1 MRyan Co., Cash Accounts Receivable A

Question

152 Accounts Receivable Homework Problem 1 MRyan Co., Cash Accounts Receivable Allowance for doubtful accts purveyor of fine, fine things, had the following balances at December 31. 2017 42,000 60,000 1,000 50,000 (1 thing) 190,000 60,000 50,000 20,000 40,000 4,000 2,000 2,000 80,000 90,000 133,000 ulated Depreciation-Equipment Accum Land Patent Accounts Payable Salary Payable Rent Payable Taxes Payable Long-Term Debt Common Stock ($1 per share) Retained Earnings During 2018 the following transactions occurred: Jan 1, Mar 1, received all beg A/R and paid all Beg A/P bought 2 things for $60,000 each. (Paid 25% down and rest payable in one year) April 15, paid year 2017 taxes payable May 1, sold one thing for $120,000 (received 3/4 down and the rest in one year) May 15, bought 1 thing for $80,000 (Paid 25% down and rest payable in one year) July 1, company wrote off $600 in bad debts July 1, sold one thing for $160,000 (received 75% down and the rest will be paid in one year) Aug 1, purchased piece of equipment for $10,000 cash. Sept 1, Sold 40,000 shares of common stock for $40,000 Oct 1, Purchased a piece of land for $50,000 Dec 1, declared and paid $.20 per share dividend. Dec 31, paid an annual payment on long term debt- $28,000. Of that amount, $8,000 was for interest and $20,000 was for principal. During the year the company paid 15 months' rent of $15,000. Also during the year the company paid salaries of $12,000 in cash, and at the end of the year they owed $3,000 for salaries. Depreciation for the year is $10,000. The long-term debt is payable in $20,000 principal payments plus interest of 10% each December 31 . The tax rate is 30% and during the year the company paid 50% of 2018 taxes. The company uses the FIFO inventory system. The company estimates that 3% of its receivables will ultimately be uncollectible. Journalize the above transactions and post them to T-Accounts. Prepare any necessary adjustments. Prepare a P&L;, Statement of Owners' Equity, Balance Sheet and Cash Flow Statement for the year 2018.

Explanation / Answer

Hey there !!

we will proceed with this question by first passing journal entries. After this, journal entires are supposed to be posted to their respctive ledger accounts.

After this we prepare trial balance from which we can prepare P&L and Balance sheet...

Let us start:

Journal

Now let us prepare P&L A/c

I hope the solution is now clear to you...do let me knw if you have any concerns.... all the best !!!

Particulars Debit Credit Bank A/c Dr            60,000 To Account Receivable Cr            60,000 (beginning AR received ) Accounts payable Dr            40,000 To Bank A/c Cr            40,000 (beginning payables paid off) Inventory A/c Dr        1,20,000 To Bank A/c Cr            30,000 To Accounts Payable Cr            90,000 (purchase of Inventory) Taxes Payable Dr              2,000 To Bank A/c Cr              2,000 (outstanding taxes paid off) Bank A/c            90,000 Account Receivables            30,000 To Sales A/c        1,20,000 Sales A/c        1,20,000 To Inventory A/c            50,000 To Gross Profit            70,000 Inventory A/c            80,000 To Bank A/c            20,000 To Accounts Payable            60,000 (purchase of Inventory) P&L A/c Dr                  600 Allowance for bad debts Cr                  600 Bank A/c        1,20,000 Account Receivables            40,000 To Sales A/c        1,60,000 Sales A/c        1,60,000 To Inventory A/c            60,000 To Gross Profit        1,00,000 Equipment A/c Dr            10,000 To cash A/c Cr            10,000 Bank A/c Dr            40,000 To Stock A/c Cr            40,000 Land A/c Dr            50,000 To Bank A/c Cr            50,000 Dividend A/c Dr            26,000 To Bank A/c Cr            26,000 Retained Earnings Dr            26,000 To Dividend A/c Cr            26,000 Long Term Debt A/c            20,000 Finance Cost              8,000 To Bank A/c            28,000 P&L Dr              8,000 To finance Cost Cr              8,000 Rent Expense            12,000 Rent paid in Advance              3,000 To Bank A/c            15,000 Salaries A/c Dr            12,000 To Cash A/c Cr            12,000 Depreciation Expense Dr            10,000 To Accu Dep Cr            10,000

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