The following transactions apply to Baker Co. for 2010, its first year of operat
ID: 2470957 • Letter: T
Question
The following transactions apply to Baker Co. for 2010, its first year of operations.
1. Issued $180,000 of common stock for cash.
2. Provided $88,000 of services on account.
3. Collected $74,000 cash from accounts receivable.
4. Loaned $13,000 BBC on September 1, 2010. The note had a one-year term to maturity and an 8 percent interest rate.
5. Paid $36,000 of salaries expense for the year.
6.Paid a $3,500 dividend to the stockholders.
7. Recorded the accrued interest on December 31, 2010 (see item 4).
8. Uncollectible accounts expense is estimated to be 1 percent of sales on account.
Make a Balance Sheet for 2010 using the above inormation
Explanation / Answer
Income Statement For the Year ended Dec 31, 2010 Service Revenue 88,000 Less: Expenses Salaries Exp. 36,000 Allowance For Bad Debts ($88000 X 1%) 880 36,880 Opearting Income 51,120 Accrued Int. on Notes Payable ($13000 X 8% X 4/12) 347 Net Income 51,467 Retained Earnings Schedule For the Year ended Dec 31, 2010 Opening Balance - Add: Net Income 51,467 Less: Dividend Paid (3,500) Ending Balance as on Dec 31, 2010 47,967 Balance Sheet As on Dec 31, 2010 Assets Current Assets Cash (180000 + 74000 - 13000 -36000 -3500) 201,500 Accounts Receivables (88000 - 74000) 14,000 Less: Allowance for Bad Debts (880) 13,120 Notes receivables - BBC 13,000 Accryed Interest on Notes Receivables 347 Total Current Assets 227,967 Tangible Assets - Total Assets 227,967 Liabilities & Shareholders' Equity Liabilities - Shareholders's Equity Common Stock 180,000 Retained Earnings 47,967 Total Shareholders' Equity 227,967 Total liabilities & Shareholders' Equity 227,967
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