The following balances are Suzie and Jarrett’s Nugget Co., as of December 31, 2015:
Accounts Receivable 40,000
Allowance for Doubtful Accts 2,000
Inventory 60,000 (3Nuggets)
Prepaid Rent 3,000
Accumulated Depreciation 60,000
Security Deposit 10,000
Account Payable 80,000
Wages Payable 5,000
Interest Payable 5,000
Taxes Payable 8,000
Note Payable 100,000
Common Stocks ($1 par) 6,000
Retained Earning 101,000
Received all beginning accounts receivable and paid all beginning accounts payable.
Bought five Nuggets at $25,000 each, 20% down, rest next year.
Sold six Nuggets, $50,000 each, 60% down, 40% next year.
Paid cash wages of $40,000 and at the end of the year owed employees $2,000.
Paid utilities of $12,000 and advertising of $10,000.
On June 30th, they paid the annual payment of $10,000 principal plus interest on the Note Payable. The note was taken out on June 30th of the previous year. (Can you figure out the Interest rate?)
On August 1, purchased a new wagon for delivery of the Nuggets for $20,000.
On December 1, they declared and paid a dividend of $5,000.
On December 31, the company purchased a piece of land by issuing a note for $80,000. The note is payable in five years. The interest at 12% is payable annually on December 31 of each year starting in 2017.
During the year they paid $8,000 in rent (rent is $1,000 per month)
The company uses the FIFO inventory flow assumption.
The depreciation for the year was $30,000.
The company estimates that 4% of its accounts receivable will never be collected. During the year the company wrote off $1,500 in bad accounts.
The tax rate is 30%. During the year the company paid all of last year’s taxes and 50% of 2016 taxes.
PREPARE JOURNAL ENTRY AND FINANCIAL STATEMENTS FOR THE YEAR 2016.