(Solution) - Raintree Corporation maintains its records on a cash basis At -(2025 Original AI-Free Solution)

Paper Details

Raintree Corporation maintains its records on a cash basis. At the end of each year the company's accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred during the year ended December 31, 2016
Cash receipts:
From customers.................................$ 450,000
Interest on note.......................................3,000
Issue of common stock............................50,000
Total cash receipts..............................$ 503,000
Cash disbursements:
Purchase of merchandise.......................$ 220,000
Annual insurance payment..........................9,000
Payment of salaries................................180,000
Dividends paid to shareholders.....................6,000
Annual rent payment...............................12,000
Total cash disbursements.......................$ 427,000
Selected balance sheet information:

Additional information:
1. On June 30, 2015, Raintree lent a customer $50,000. Interest at 6% is payable annually on each June 30. Principal is due in 2019.
2. The annual insurance payment is made in advance on March 31.
3. Annual rent on the company's facilities is paid in advance on September 30.
Required:
1. Prepare an accrual basis income statement for 2016 (ignore income taxes).
2. Determine the following balance sheet amounts on December 31, 2016
a. Interest Receivable
b. Prepaid Insurance
c. Prepaid Rent