With the provided balance sheet of Johnson Corporation as of 12/31/2007 and the relevant data for 2008:
1. Record the effects of the information given and provide in journal entry form.
2. Prepare an income statement, statement of retained earnings, and a balance sheet for year ending December 31, 2008.
Johnson Corporation:
Financial Data for 2008
1. Sales on account for the year were $221,632.
2. Cash collected from customers on account, $219,514.
3. Purchases of merchandise were $132,500, of which $12,425 had not been paid by the end of the year.
4. Operating expenses of the current year, paid in cash, were $57,394. In addition, $1,575 of such expense were incurred but not paid by the end of the year.
5. Rent paid in cash during the year was $7,800, of which $6000 related to 2008, and the remainder to 2009. This payment is not included in #4 above.
6. Accounts receivables of $1,950 were written off as uncollectible.
7. Beginning accounts payable were paid.
8. A cash dividend of $2,500 was paid to the shareholders during the year.
9. Prepaid rent at 12/31/07 was for January and February of 2008.
10. As a result of the physical inventory, it was determined that inventory on hand at 12/31/2008 was $27,500.
11. Based on an aging of the accounts receivable, it was determined that the allowance for bad debts at 12/31/2008 should be $1,100.
12. Depreciation expenses for the year is $2,700 (classified as an operating expense).
13. The note payable bears simple interest at 8% annually. Interest for 2008 is due January 3, 2009.
14. Income tax expense is 20% of the net income before taxes. These taxes are payable March 15, 2009.
Johnson Corporation
Balance sheet, December 31, 2007
Assets:
Cash 6,155
Accounts Receivable 17,320
Less : Allowance for bad debts 700 16,620
Inventory 26,440
Prepaid Rent 1,200
Total Current Assets 50,415
Plant and equipment 62,720
Less: Accumulated Depreciation 33,242 29,478
Total Assets 79,893
Liabilites and Stockholder's Equity
Liabilities:
Current:
Accounts payable 21,735
Long-Term:
Notes payble 30,000
Total Liabilities 51,735
Stockholder's Equity:
Common Stock 5,000
Retained earnings 23,158 28,158
Total liabilities and stockholder's equity 79,893