problem: Financial Data for 2008
[A] Sales for the year, all on account, were $221,632.
[B] Cash collected from consumers on account, $219,514
[C] Purchases of merchandise were $132,500, of which $12,425 had not been paid by the end of the year
[D] Operating expenses of the current year, paid in cash, were $57,394. In addition, $1,575 of such expenses were incurred but not paid by the end of the year.
[E] Rent paid in cash during the year was $7,800, of which $6,000 related to 2008, and the remainder to 2009. This payment is not included in #4 above.
[F] Accounts receivable of $1,950 was written off as uncollectible.
[G] Starting accounts payable were paid.
[H] A cash dividend of $2,500 was paid to the shareholders during the year.
[I] Prepaid rent at 12/31/07 was for January and February of 2008.
[J] As a result of the physical inventory, it was determined that inventory on hand at 12/31/08 was $27,500.
[K] Based on an aging of the accounts receivable, it was determined that the allowance for bad debts at 12/31/08 should be $1,100.
[L] Depreciation expense for the year is $2,700 (classified as an operating expense).
[M] The note payable bears simple interest at 8 percent yearly. Interest for 2008 is due January 3, 2009.
[N] Income tax expense is 20 percent of net income before taxes. These taxes are payable March 15, 2009.