Determine the balance for Retained Earnings for December 31, 2006..
The following information pertains to the Walsh Company and its operations during calendar year 2006:
1. The company purchased $ 1,125,000 worth of inventory during the year, all on credit. Its ending inventory or 2006, totaled $ 667,000.
2. The company had sales totaled $1,900,000. All sales were on credit.
3. Company management assumed for the year that 1% of its credit sales would be uncollectible and recorded these credit sales as bad debt. (hint: the accounts impacted here are “bad debt expenses” and “allowances for doubtful accounts”).
4. For the year, the company paid $1,150,000 total cash towards its trade accounts payable.
5. During the year, $30,000 worth of accounts receivable were determined to be uncollectible. (hint: accounts impacted here are “accounts receivable” and “reserve for doubtful accounts”.)
6. The company collected cash on accounts receivable totaling $1,890,000.
7. The company recognized $20,000 worth of property tax expense and $10,000 worth of insurance expense for the year. Both of these expenses had previously been recognized as prepaid expenses.
8. Salary expenses totaled $$190,000. Office expenses totaled $$55,000; and Selling/ Administrative Expenses totaled $89,000. All these expenses were paid with cash
9. Interest expense, paid with cash, totaled $70,000.
10. The company made principal payments of $45,000 on its mortgage note and $15,000 on other long-term debts it owes.
11. The company recognized $42,000 of straight-lined depreciation expense.
12. The company paid off its income taxes payable totaling $230,000 using cash.
13. The income tax expense for the year 2006 is $100,000. The 2006 income taxes will be paid in 2007. (2006 income taxes are recorded as “income taxes Payable” in 2006).
14. The company declared and paid $100,000 in cash dividends to its owners.
15. Net Income for 2006 is $158,000.
Using the information presented above and on the preceding page, complete the items below.
A) Prepare a properly formatted Balance Sheet for the Walsh Company dated December 31, 2005.
B) Determine the balance for “Cash” as of December 31. 2006.
C) Determine the balance for Retained Earnings for December 31, 2006.
Determine the balance for Retained Earnings for December 31, 2006.
