Response to the following problem:
Zambrano Wholesale Corporation maintains its records on a cash basis. At the end of each year the company's accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred during the year ended December 31, 2013:
| Cash receipts: |
|
|
| From customers |
$ |
675,000 |
| Interest on note |
|
4,000 |
| Loan from a local bank |
|
100,000 |
|
|
|
| Total cash receipts |
$ |
779,000 |
|
|
|
| Cash disbursements: |
|
|
| Purchase of merchandise |
$ |
390,000 |
| Annual insurance payment |
|
6,000 |
| Payment of salaries |
|
210,000 |
| Dividends paid to shareholders |
|
10,000 |
| Annual rent payment |
|
24,000 |
|
|
|
| Total cash disbursements |
$ |
640,000 |
Selected balance sheet information:
| |
12/31/12 |
12/31/13 |
|
| Cash |
$ 25,000 |
$ 164,000 |
|
| Accounts receivable |
62,000 |
92,000 |
|
| Inventory |
80,000 |
62,000 |
|
| Prepaid insurance |
2,500 |
? |
|
| Prepaid rent |
11,000 |
? |
|
| Interest receivable |
3,000 |
? |
|
| Note receivable |
50,000 |
50,000 |
|
| Equipment |
100,000 |
100,000 |
|
| Accumulated depreciation"equipment |
(40,000) |
(50,000 |
|
| Accounts payable (for merchandise) |
110,000 |
122,000 |
|
| Salaries payable |
20,000 |
24,000 |
|
| Notes payable |
0 |
100,000 |
|
| Interest payable |
0 |
? |
Additional information:
1. On March 31, 2012, Zambrano lent a customer $50,000. Interest at 8% is payable annually on each March 31. Principal is due in 2016.
2. The annual insurance payment is made in advance on April 30. The policy period begins on May 1.
3. On October 31, 2013, Zambrano borrowed $100,000 from a local bank. Principal and interest at 6% are due on October 31, 2014.
4. Annual rent on the company's facilities is paid in advance on June 30. The rental period begins on July 1.
Required:
1. Prepare an accrual basis income statement for 2013 (ignore income taxes).