On December 31, 2011, The Walsh Company had the following balances in its balance sheet accounts:
Paid-in Capital $ 100,000
Gross Accounts Receivable $ 151,000
Accumulated Depreciation on PPE $ 613,000
Mortgage Notes Payable $ 560,000
Income Taxes Payable $ 230,000
Prepaid Expenses (Taxes/Insurance) $ 30,000
Retained Earnings $ 297,000
Cash $ 73,000
Inventory $ 689,000
Allowance for Doubtful Accts. $ 12,000
Plant/Property/Equipment (PPE) $ 912,000
Trade Accounts Payable $ 123,000
Other Long-term Debt $ 115,000
Land $ 195,000
Except where noted, the following information pertains to the Walsh Company and its operations during calendar year 2012:
1) The company purchased $ 1,125,000 worth of inventory during the year, all on credit. Its ending inventory on December 31, 2012 totaled $ 667,000.
2) The company had sales totaling $1,900,000. All sales were on credit.
3) Company management assumed for the year that 1% of its credit sales would be uncollectible and recorded these credit sales as bad debt.
4) For the year, the company paid $1,150,000 total cash towards its trade accounts payable.
5) During the year, $30,000 worth of accounts receivable were determined to be uncollectible.
6) The company collected cash on accounts receivable totaling $1,890,000.
7) The company recognized $20,000 worth of property tax expense and $10,000 worth of insurance expense for the year. Both of these expenses had previously been recognized as prepaid expenses.
8) Salary expenses totaled $190,000; Office expenses totaled $55,000; and Selling/Administrative Expenses totaled $89,000. All of these expenses were paid with cash.
9) Interest expense, paid with cash, totaled $70,000.
10) The company made principal payments of $45,000 on its mortgage note and $15,000 on other long-term debts it owes.
11) The company recognized $42,000 of straight-lined depreciation expense.
12) The company paid off its income taxes payable totaling $230,000 using cash.
13) The income tax expense for the year 2012 is $100,000. The 2012 income taxes will be paid in 2013. (2012 income taxes are recorded as "Income Taxes Payable" in 2012.)
14) The company declared and paid $80,000 in cash dividends to its owners.
15) Net Income for 2012 is $158,000.
Complete the items below using the information presented above and on the preceding page,. Watch the dates for the items that I am requesting!! Show how you arrived at your answer for credit!!
A) Prepare and attach a properly formatted Balance Sheet for the Walsh Company dated December 31, 2011. (25 points)
B) Determine the balance for "Cash" as of December 31, 2012. Show how you arrived at your answer. To solve this, IT IS NOT NECESSARY to develop/create a cash flow statement but be sure you show me how you arrived at your answer for partial credit in the event you arrive at an incorrect answer. (20 points)
C) Determine the balance for Retained Earnings as of December 31, 2012. There is no partial credit for this one - you either get it right and get five points or you get it wrong and get zero. (5 points)
Problem 2: (50 points)
The CFO for Fin Tackle Company, a retailer of fishing supplies, has provided you the following information from the company's accounting records. From the information presented, prepare a properly formatted, multi-step Income Statement (i.e. showing ALL of the appropriate intermediate profit point lines). Per share presentation of income data is not being requested. Balance sheet account information is as of the close of business for December 31, 2012 unless otherwise indicated. Income statement information is applicable for the entire calendar year 2012 unless otherwise indicated. The company's income tax rate is 35%. The company did not purchase or dispose of any depreciable long-term assets. (Watch out - you may have more information than is needed to complete this problem).
Sales/Revenues $600,000
Property Tax Expense 80,000
Cash 10,000
Selling Expenses 20,000
Unearned Revenues 15,000
Prepaid Insurance 10,000
General and Administrative Expenses 15,000
Purchases of Goods for sale 75,000
Inventory available for sale as of 1/1/2012 100,000
Inventory available for sale as of 12/31/2012 95,000
Accum. Depreciation on Plant, Property, Equipment (as of 1/1/12) 120,000
Accum. Depreciation on Plant, Property, Equipment (as of 12/31/12) 160,000
Plant, Property and Equipment 500,000
Long-term debt 50,000
Dividends declared and paid to shareholders 40,000
Dividend Income 45,000
Interest Income 3,000
Interest Expense 12,000
Net Accounts Receivable 15,000
Retained Earnings 60,000
Infrequent expense associated with a weather event 3,000
Accounts Payable 15,000
Bad Debt Expense 10,000