Problem
Dawson O'Connor is the owner of Miller Island Sales, a distributor of fishing supplies. The following is the balance sheet of the company as of December 31,2012:
|
Cash
|
$2,300
|
Accounts Payable
|
$6,400
|
|
Accounts Receivable
|
10,400
|
Salaries Payable
|
1,200
|
|
Inventory
|
12,500
|
|
|
|
Equipment
|
8,000
|
|
|
|
Less: Accumulated Dep
|
(6,500)
|
D. O'Connor Capital
|
19,10
|
|
Total
|
$26,700
|
Total
|
$26,700
|
Dawson keeps very few records and has asked you to help him prepare Miller Island Sales' 2013 Financial statements. An analysis of the 2013 cash transactions recorded in the company's checkbook indicates deposits and checks as follows:
Total Deposits: $173,200; all were collections from customers except for a long-term $10,000 bank loan
Checks Written: $169,800 Summarized as follows:
|
Inventory
|
$123,100
|
Note Payments (Including interest of $650)
|
$2,650
|
|
Salaries
|
4,250
|
Office Expense
|
3,400
|
|
Rent
|
4,800
|
Auto Expense
|
4,100
|
|
Equipment
|
4,000
|
Withdrawals
|
23,500
|
Other information about the company is as follows:
1. Accounts Receivable at December 31,2013: $9,200
2. Accounts Payable at December 31:
|
2012
|
Inventory
|
$6,100
|
2013
|
Inventory
|
$8,500
|
|
Office Expense
|
300
|
Office Expense
|
200
|
|
|
|
Total
|
$6,400
|
Total
|
$8,700
|
|
|
3. Salaries payable at December 31,2013: $1,800
4. Equipment is depreciated by the straight-line method over 10-years. The equipment purchased in 2013 was acquired on July 1. All of the equipment will have zero salvage valueat the end of its useful life.
5. Interest payable at December 31,2013: $140
6. The company uses a periodic inventory system. Inventory at December 31, 2013: $17,400
Required:
Prepare a 2013 income statement and a balance sheed as of December 31, 2013.