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On December 31 2005 The Walsh Company Had The Following

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16 views2 pages

On December 31 2005 The Walsh Company Had The Following

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Uploaded by

Amit Pandey
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© © All Rights Reserved
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Solved: On December 31 2005 The Walsh Company had the

following

On December 31, 2005, The Walsh Company had the following balances in its balance sheet
accounts:
Cash .................. $ 98,000
Gross Accounts Receivables .......... $151,000
Allowance for Doubtful Accts ......... $ 12,000
Prepaid Expenses (Taxes/Insurance) ...... $ 30,000
Inventory .................. $689,000
Land ................... $195,000
Plant/Property/Equipment (PPE) ......... $912,000
Accumulated Depreciation on PPE ........ $613,000
Trade Accounts Payable .......... $123,000
Income Taxes Payable ............ $230,000
Mortgage Notes Payable ........... $560,000
Other Long-Term Debt ........... $115,000
Retained Earnings ............. $297,000

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.
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.

Reach out to [email protected] for enquiry.


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.

ANSWER
https://solvedquest.com/on-december-31-2005-the-walsh-company-had-the-following/

Reach out to [email protected] for enquiry.


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