The following trial balance is for the Florida Sales Company, a home improvement retailer, at January 1, 2010: Debit Credit Cash $49,950 Accounts Receivable 14,000 Allowance for Doubtful Accounts $2,600 Merchandise Inventory 20,200 Land 50,000 Buildings 81,000 Accumulated Depreciation ? Buildings 37,850 Equipment 45,000 Accumulated Depreciation ? Equipment 17,650 Accounts Payable 3,750 Notes Payable 38,500 Common Stock, $10 par 40,000 Retained Earnings 158,300 $260,150 $260,150 Part 1 Journalize the appropriate entries for the following transactions for the period January 1, 2010 to December 31, 2010. The company uses a perpetual inventory system. February 1 Paid $3,750 accounts payable balance due to a supplier. March 15 Received $2,500 partial payment on a $5,000 accounts receivable balance. Wrote off the rest of the account as uncollectible. April 1 April 5 Purchased on account $53,700 merchandise for resale, with 2/10, n/30 terms. Paid the invoice for April 1 purchase October 10 Sold merchandise for cash of $28,000. Cost of the merchandise sold was $12,200. November 1 Borrowed $20,000 at 6% interest for 5 years with annual payments of principal and interest on October 31. Used the loan proceeds to purchase a $20,000 delivery truck. December 5 Sold merchandise on account for $91,500. Cost of the merchandise sold was $40,500. Payment terms on the invoice were 1/10, n/30. December 7 Of the merchandise sold on December 5, $2,000 was returned. Cost of the merchandise was $1,100. December 15 Paid $3,000 for rent of a warehouse facility. The payment covers rent for December and January. December 15 Declared a $1/share cash dividend, payable January 14 to shareholders of record on January 3. December 18 Purchased office supplies of $1,600 on account. December 31 Recorded depreciation for the year Buildings have a 30-year life, a $5,000 residual value and use straight-line depreciation Equipment has a 5-year life, no residual value and use double-declining balance depreciation Vehicles have a 5-year life, no residual value and use straight-line depreciation December 31 The allowance for doubtful accounts balance is estimated as follows: 2% of current balances are estimated as uncollectible 20% of past-due balances are estimated as uncollectible. December 31 A count of office supplies shows $550 still on hand on December 31. January 2, 2011 Paid salaries of $24,500 for the pay period December 31 through January 4. Salaries are earned evenly during the pay period. Part 2 Prepare a trial balance as of December 31, 2010. Part 3 Prepare a December 31, 2010 Balance Sheet and Income Statement Part 4 Calculate and analyze the appropriate financial ratios to determine the profitability, liquidity and solvency of Florida Sales Company.
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