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16 (30 points) Company "Audio-flic" is an audio electronics reseller company which was established on Jan 1, 2018 by Issuance of 2,000 shares ($1 par value) for $10,000 cash. As of Dec 31 2018, it had the following items on its balance sheet: Cash - $42,000, Accounts Receivable, Net - $52,250 (Accounts Receivable Gross - ?, Allowance for doubtful account - $2,750), Inventory- (?), Fixed assets, Net (vehicle)- $90,000 (Historical cost - $150,000, Accumulated depreciations - ?), Accounts Payable- $2,250, Other payable - $4,000, Long term loan - $60,000. Common Stock - (?), Premium (?) Retained Earnings - (?). Total equity - $138,000. The initial share issuance was the only one in 2018. -On Jan 1, 2018 the company purchased a vehicle for $150,000 in cash. The vehicle has a residual value of $20,000. The vehicle has a useful life of 5 years and the company uses double declining balance (DDB) method to depreciate it. During 2019 the company had the following transactions: 1. Feb 1 - Sold the beginning balance of inventory for $68,000 in cash. 2. Mar 1 - Issued 1,500 shares for $7,500 in cash. Half were purchased by new shareholders. 3. Mar 1 Purchased 1,000 units of inventory on account, $120 each. Half sold on September 4, 2019 for $90,000. The payments terms were 50% in cash and the rest on account. 4. Apr 1 Collected $39,000 from accounts receivable and wrote off $1,000 from the accounts receivable. 5. Mar 1-Took a $75,000 loan from the bank that is due back on January 1, 2021. The company paid the bank interest amount of $2,000 at the end of the year for all existing loans (including the one from opening balance). During the year, the company paid the banks $16,500 of loans principal. 6. June 1 - $5,000 paid in cash for training of employees. 7. July 1 - Purchased new motorcycle for $80,000. 50% paid in cash and the rest on account. The motorcycle has no residual value. The motorcycle has a useful life of 4 years and the company uses straight-line method in order to depreciate the motorcycle. 8. Oct 1 - The company started negotiations with a new client. If a contract will be signed, the company expects to recognize a revenue in amount of $75,000. 9. Nov 1 - Purchased an annual insurance premium for $54,000 in cash. The insurance period began on that day. 10. Dec 1 Declared a dividend in the amount of $4,000 which was paid in cash on that same day. 11. Dec 31 - Purchased inventory on account for $10,000. 12. During 2019 the company paid $11,000 in cash for 2019 municipal property tax. 13. Dec 31 - Agreed with the tax authorities on a tax payment of 20% from the profit before tax for 2019. The payment will be made within 90 days. 14. Dec 31 - Sold vehicle for $60,000 on account. Unless mentioned otherwise, assume the transaction is in cash. Assume the company uses the perpetual inventory system and estimates the allowance for doubtful accounts using the balance sheet method and the same percentage was applied over the years. No other transactions occurred during the year. Required: Journalize the transactions (including adjusting journal entries for year-end) and prepare the Balance Sheet and Income Statement for year ended 31st December 2019

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