The following is the balance sheet of Korver Supply Company at December 31, 2017
ID: 2396784 • Letter: T
Question
The following is the balance sheet of Korver Supply Company at December 31, 2017. KORVER SUPPLY COMPANY Balance Sheet At December 31, 2017
Assets
Cash $ 120,000
Accounts receivable 300,000
Inventories 200,000
Furniture and fixtures, net 150,000
Total assets $ 770,000
Liabilities and Shareholders’ Equity
Accounts payable (for merchandise) $ 190,000
Note payable 200,000
Interest payable 6,000
Common stock 100,000
Retained earnings 274,000
Total liabilities and shareholders' equity$ 770,000
Transactions during 2018 were as follows:
1. Sales to customers on account $ 800,000
2. Cash collected from customers 780,000
3. Purchase of merchandise on account 550,000
4. Cash payment to suppliers 560,000
5. Cost of merchandise sold 500,000
6. Cash paid for operating expenses 160,000
7. Cash paid for interest on note 12,000
The note payable is dated June 30, 2017 and is due on June 30, 2019. Interest at 6% is payable annually on June 30. Depreciation on the furniture and fixtures for the year is $20,000. The furniture and fixtures originally cost $300,000.
Required: Prepare a classified balance sheet at December 31, 2018 (ignore income taxes).
Explanation / Answer
KORVER SUPPLY COMPANY Balance Sheet As on 31 December, 2018 Asstes Amt.($) Cash 168,000 Accounts Recievable 320,000 Inventories 250,000 Furniture and Fixtures 130,000 Total $ 868,000 Liabilities Amt.($) Note Payable 200,000 Accounts Payable 180,000 Interest Payable 6,000 Common Stock 100,000 Retained Earning 382,000 Total $ 868,000 Working Notes: KORVER SUPPLY COMPANY Income Statement As on 31 December, 2018 Particulars Amt.($) Sales 800,000 Less: Cost of Goods Sold (500,000) Operating expenses (160,000) Interest expense (12,000) Depreciation (20,000) Net Income $ 108,000 KORVER SUPPLY COMPANY Statement of Retained Earning As on 31 December, 2018 Particulars Amt.($) Opening Balance 274,000 Add: Net Income 108,000 Closing Balance $ 382,000 Account Recievable T-Account Opening Balance 300,000 Add: Sales on account 800,000 Less: Cash Received from customers (780,000) Closing balance 320,000 Accounts Payable T-Account Opening Balance 190,000 Add: Merchandis Purchase 550,000 Less: Cash Received from customers (560,000) Closing balance 180,000 Cash T-Account Opening Balance 120,000 Add: Cash Collected 780,000 900,000 Less: Cash Payment to supplier (560,000) Cash paid for operating expense (160,000) Interest paid (12,000) Closing Balance 168,000
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