[The following information applies to the questions displayed below. The followi

Question

[The following information applies to the questions displayed below. The following post-closing trial balance was drawn from the accounts of Hardwood Timber Co. as of December 31, 2013 Credit Debit 6,600 18,220 Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common stock Retained earnings $ 1,660 23,560 10,750 21,400 14,570 Totals $48,380 $48,380 Transactions for 2014 1. Acquired an additional $8,300 cash from the issue of common stock. 2. Purchased $58,300 of inventory on account. 3. Sold inventory that cost $60,100 for $93,100. Sales were made on account. 4. Wrote off $1,260 of uncollectible accounts. 5. On September 1, Hardwood loaned $8,500 to Pine Co. The note had a 6 percent interest rate and a one- year term 6. Paid $15,220 cash for salaries expense 7. Collected $73,760 cash from accounts recelvable 8. Paid $50,140 cash on accounts payable 9. Paid a $5,000 cash dividend to the stockholders. 10. Estimated uncollectible accounts expense to be 1.50 percent of sales on account. 11. Recorded the accrued interest at December 31, 2014.

Explanation / Answer

a.

b-1. Hardwood Timber Co.

Income Statement

For the year ended December 31, 2014

b-2. Hardwood Timber Co.

Statement of changes in Owners' Equity

For the year ended December 31, 2014

b-3. Hardwood Timber Co.

Balance Sheet

December 31, 2014

b-4. Hardwood Timber Co.

Statement of Cash Flows

For the year ended December 31, 2014

Event Cash Accounts Receivable - Allowance Merchandise Inventory Notes Receivable Interest Receivable Accounts Payable Common Stock Retained Earnings Account Titles for Retained Earnings Bal 6,600 18,220 1,660 23,560 0 0 10,750 21,400 14,570 1. 8,300 8,300 NA 2. 58,300 58,300 NA 3a. 93,100 93,100 Sales 3b. -60,100 -60,100 Cost of Goods Sold 4. - 1,260 -1,260 NA 5. - 8,500 8,500 NA 6. - 15,220 - 15,220 Salaries Expense 7. 73,760 - 73,760 NA 8. -50,140 - 50,140 NA 9. - 5,000 - 5,000 Dividends 10. 1,396.50 - 1,396.50 Bad Debt Expense 11. 170 170 Interest Revenue Bal 9,800 36,300 - 1,796.50 21,760 8,500 170 18,910 29,700 26,123.50

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