McGuire Corporation began operations in 2018. The companypurchases computer equipment from manufacturers and then sells toretail stores. During 2018, the bookkeeper used a check register torecord all cash receipts and cash disbursements. No other journalswere used. The following is a recap of the cash receipts anddisbursements made during the year. Cash receipts: Sale of commonstock $ 55,000 Collections from customers 295,000 Borrowed fromlocal bank on April 1, note signed requiring principal and interestat 12% to be paid on March 31, 2019 29,000 Total cash receipts $379,000 Cash disbursements: Purchase of merchandise $ 182,500Payment of salaries and wages 68,500 Purchase of office equipment33,000 Payment of rent on building 9,250 Miscellaneous expenses10,700 Total cash disbursements $ 303,950 You are called in toprepare financial statements at December 31, 2018. The followingadditional information was provided to you: Customers owed thecompany $16,500 at year-end. At year-end, $27,650 was still due tosuppliers of merchandise purchased on credit. At year-end,merchandise inventory costing $43,400 still remained on hand.Salaries and wages owed to employees at year-end amounted to$4,350. On December 1, $2,250 in rent was paid to the owner of thebuilding used by McGuire. This represented rent for the months ofDecember through February. The office equipment, which has a10-year life and no salvage value, was purchased on January 1,2018. Straight-line depreciation is used. Required: Prepare anincome statement for 2018 and a balance sheet as of December 31,2018. (For Balance Sheet only, items to be deducted must beindicated with a negative amount.)
