Required information [The following information applies to the questions display

Question

Required information

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

Sage Inc. experienced the following transactions for 2018, its first year of operations:

Issued common stock for $50,000 cash.

Purchased $140,000 of merchandise on account.

Sold merchandise that cost $110,000 for $250,000 on account.

Collected $236,000 cash from accounts receivable.

Paid $118,000 on accounts payable.

Paid $50,000 of salaries expense for the year.

Paid other operating expenses of $28,000.

Sage adjusted the accounts using the following information from an accounts receivable aging schedule:

Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Sage Inc. for 2018.

Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $ 10,000 0.01 030 2,000 0.05 3160 1,200 0.10 6190 500 0.20 Over 90 days 300 0.50

Explanation / Answer

CASH FLOW STATEMENT Common stock issued           50,000.00 Account receivble        236,000.00 Inflow        286,000.00 Accounts Payable        118,000.00 Salaries           50,000.00 Other operating expenses           28,000.00 Outflow        196,000.00 Cash Balance           90,000.00 INCOME STATEMENT Sales Revenue        250,000.00 Total Revenue        250,000.00 Cost of goods sold        110,000.00 Salaries           50,000.00 Other Operating expenses           28,000.00 Provision for uncollectible receivables                 570.00 Total Expenses        188,570.00 Operating Income           61,430.00 BALANCE SHEET CURRENT ASSETS Cash   and bank balance                   90,000.00 Account Reeivable           14,000.00 Less: Provision for uncollectibles                 570.00                   13,430.00 Inventories                   30,000.00 TOTAL ASSETS                 133,430.00 CURRENT LIABILITIES Account Payable                   22,000.00 STOCKHOLDERS FUND Common Stock                   50,000.00 Retained earnings                   61,430.00 TOTAL LIABILITIES                 133,430.00 WORKING OF PROVISION FOR UNCOLLECTIBLE RECEIVABLES AGE OF RECEIVABLES BALANCE DUE UNCOLLECTIBLE % UNCOLLECTIBLE AMOUNT current        10,000.00 0.01 100 030          2,000.00 0,05 100 3160          1,200.00 0.10 120 6190            500.00 0.20 100 Over 90 days            300.00 0.50 150 TOTAL           14,000.00 570

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