e. What is the total amount of cash that r. How will the loan and interest be re
ID: 2568274 • Letter: E
Question
e. What is the total amount of cash that r. How will the loan and interest be reported on Benz's 2019 Be to Mark He The following post-closing trial balance was drawn from the accounts of Litle (LGS) as of December 31, 2017: hat is the total amount of interest that Benz's earned on the loan Exercise 5-13 Comprehensive single-cycle problem Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Accounts Payable Common Stock Retained Earnings $9,000 1,000 2,500 78,000 21,000 50,000 54,500 Transactions for 2018 1. Acquired an additional $20,000 cash from the issue of common stock. 2. Purchased $85,000 of inventory on account. 3. Sold inventory that cost $91,000 for $160,000. Sales were made on account. 4. The company wrote off $900 of uncollectible accounts. 5. On September 1, LGS loaned $18,000 to Eden Co. The note had an 8 percent interes one-year term. 6. Paid $19,000 cash for operating expenses. 7. The company collected $161,000 cash from accounts receivable. 8. A cash payment of $92,000 was paid on accounts p 9. The company 10. Uncollectible accounts are estimated to be 1 11. Recorded the accrued interest at December 31,2018 (see item 5). Required a. Organize the transaction data in accounts b. Prepar paid a $5,000 cash dividend to the stockholders. percent of sales on account. re an income statement, a statement a statement of cash 2018. under an accountir er an accounting equation. anges in stockholders' equity, a Exercise 5-14 Effect of credit card sales on finguu Hlows for 2018, mienit of changes in stockholders' equity. a in stockt Ultra Day Spa provided $120,000 of ser credit cards. Ultra submitted credit card compaExplanation / Answer
Answer a. Asset = Liabilities + Equity Income Statement Cash + Accounts Receivable + Allowance for Doubtful Accounts + Inventory + Accrued Interest + Notes Receivable = Accounts Payable + Common Stock + Retained Earnings Revenue - Expenses = Net Income Begininng Balance 9,000 + 41,000 + (2,500) + 78,000 + + = 21,000 + 50,000 + 54,500 - = - 1 Issue of Common Stock 20,000 + + + + + = + 20,000 + - = - 2 Purchased inventory + + + 85,000 + + = 85,000 + + - = - 3-1 Sale of Inventory on account + 160,000 + + + + = + + 160,000 160,000 - = 160,000 3-2 Cost of Goods Sold + + + (91,000) + + = + + (91,000) - 91,000 = (91,000) 4 W/o Uncollectible Accounts + (900) + 900 + + + = + + - = - 5 Issue of Notes Receivable (18,000) + + + + + 18,000 = + + - = - 6 Paid Operating Expenses (19,000) + + + + + = + + (19,000) - 19,000 = (19,000) 7 Cash Collected from Accounts Receivable 161,000 + (161,000) + + + + = + + - = - 8 Cash Paid to Accounts Payable (92,000) + + + + + = (92,000) + + - = - 9 Cash Dividend Paid (5,000) + + + + + = + + (5,000) - = 10 Uncollectible accounts + + - + + + = + + - - = 11 Accrued Int. on Notes Receivable + + + + 480 + = + + 480 480 - = + + + + + = + + - = - Total 56,000 + 39,100 + (1,600) + 72,000 + 480 + 18,000 = 14,000 + 70,000 + 99,980 160,480 - 110,000 = 50,000 Total Assets = $183,980 = Total Liabilities = $14,000 + Total equity = $169,980 Total Liabilities & Stockholder's Equity = $183,980 Answer 2. Income Statement For the Year Ended First Year Sales 160,000 Less: Cost of Goods Sold 91,000 Gross Margin 69,000 Operating Expenses 19,000 Net Operating Income - 50,000 Other Income Interest on Notes Receivable 480 Net Income 50,480 Answer 3. Balance Sheet As on the End of First Year Assets Current Assets Cash 56,000 Accounts Receivable 39,100 Less: Allowance for Doubtful Accounts (1,600) 37,500 Inventory 72,000 Accrued Interest 480 Notes Receivable 18,000 183,980 Total Assets 183,980 Liabilities & Stockholders' Equity Liabilities Current Liabilities Accounts Payable 14,000 Total Liabilities 14,000 Stockholders' Equity Common Stock 70,000 Retained Earnings 99,980 Total Stockholders' Equity 169,980 Total Liabilities & Stockholders' Equity - 183,980 Answer 4. Statement of Cash Flows (Indirect Method) For the Year ended Dec 31, 2018 Cash Flow from opearating activities: Net Income (Loss) 50,480 Add/(Less) non cash effects on operating activities Decrease in Accounts Receivables 1,000 Decrease in Inventory 6,000 Increase in Accrued Interest (480) Decrease in Acoounts Payable (7,000) (480) Net Cash provided by operating activities 50,000 Cash flow from Investing Activities - Cash Flow from Financing Activities Issue of Notes Receivable (18,000) Cash dividend paid (5,000) Issue of Common Stock 20,000 Cash Flow from Financing Activities (3,000) Net Increase / (Decrease) in Cash 47,000 Cash balance at the beginning 9,000 Cash balance at the end of Dec 31, 2018 56,000
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