Porter Corporation's balance sheet at December 31, 2011, is presented below.
PORTER CORPORATION
Balance Sheet
December 31, 2011 |
| Cash |
|
$14,730 |
|
|
Accounts payable |
|
$8,630 |
| Accounts receivable |
|
21,600 |
|
|
Common stock |
|
16,500 |
| Allowance for doubtful accounts |
|
(740 |
) |
|
Retained earnings |
|
19,460 |
| Inventory |
|
9,000 |
|
|
|
|
|
|
|
$44,590 |
|
|
|
|
$44,590 |
During January 2012, the following transactions occurred. Porter uses the perpetual inventory method.
| Jan. 1 |
|
Porter accepted a 4-month, 8% note from Anderko Company in payment of Anderko's $3,600 account. |
| 3 |
|
Porter wrote off as uncollectible the accounts of Elrich Corporation ($400) and Rios Company ($300). |
| 8 |
|
Porter purchased $15,390 of inventory on account. |
| 11 |
|
Porter sold for $26,500 on account inventory that cost $17,110. |
| 15 |
|
Porter sold inventory that cost $780 to Fred Berman for $1,000. Berman charged this amount on his Visa First Bank card. The service fee charged Porter by First Bank is 3%. |
| 17 |
|
Porter collected $22,700 from customers on account. |
| 21 |
|
Porter paid $16,630 on accounts payable. |
| 24 |
|
Porter received payment in full ($300) from Rios Company on the account written off on January 3. |
| 27 |
|
Porter purchased advertising supplies for $1,460 cash. |
| 31 |
|
Porter paid other operating expenses, $3,420. |
Adjustment data:
| 1. |
|
Interest is recorded for the month on the note from January 1. |
| 2. |
|
Bad debts are expected to be 6% of the January 31, 2012, accounts receivable. |
| 3. |
|
A count of advertising supplies on January 31, 2012, reveals that $580 remains unused. |
| 4. |
|
The income tax rate is 30%. (Hint: Prepare the income statement up to "Income before taxes" and multiply by 30% to compute the amount; round to whole dollars.) |