Saint MBA560 week 3 homework

The following trial balance was prepared for Lakeview Sales and Service on December 31, 2006 after the closing entries were posted.

Lakeview had the following transactions in 2007:

1. Purchased merchandise on account for $270,000.

2. Sold merchandise that cost $215,000 on account for $350,000.

3. Performed $80,000 of services for cash.

4. Sold merchandise for $76,000 to credit card customers. The merchandise cost $47,500. The credit card company charges a five percent fee.

5. Collected $360,000 cash from accounts receivable.

6. Paid $274,000 cash on account payable.

7. Paid $126,000 cash for selling and administrative expenses.

8. Collected cash for the full amount due from the credit card company (see item 4)

9. Loaned $60,000 to R. Shell. The note had an 8 percent interest rate and a one-year term to maturity.

10. Wrote off $650 of accounts as uncollectible.

11. Made the following adjusting entries:

(a) Recorded three months’ interest on the note at December 31, 2007 (see item 9).

(b) Estimated uncollectible accounts expense to be .5 percent of sales on account.

Required:

Prepare General journal entries for those transactions; post the entries to T-accounts; and prepare an income statement, a statement of stockholders’ equity, a balance sheet, a statement of cash flows for 2007.