Howdy Company keeps its accounting records on a cash basis during the year. At year-end, it adjusts its books to the accrual basis for preparing its financial statements. At the end of 2011, Howdy Company reported the following balance sheet items: Debit Credit Cash $ 14,500 Accounts Receivable 12,000 Inventory 14,800 Equipment 30,000 Accumulated Depreciation $ 9,000 Accounts Payable 12,100 Unearned Revenue 3,000 Common Stock 50,200 It is now the end of 2012. The companys checkbook shows cash receipts from customers of $87,000 and cash payments of $77,400. An examination of the cash payments revealed the following: 1) $43,200 was paid to suppliers for inventory 2) $30,000 was paid for operating costs 3) $4,200 was paid on January 1, 2012 for a two-year insurance policy On December 31, 2012, the following other information was available: 1) Customers owed Howdy $18,500 2) Howdy owed suppliers $16,500 3) Howdy owed their employees $900 4) Howdy owed their customers $6,000 in services. 5) Howdys ending inventory balance was $15,400. Additionally, Howdy is depreciating their equipment using straight-line depreciation over a 10-year life (no salvage value). Required: Using accrual-based accounting, answer the following. Note that you are not required to consider the tax impact of these transactions. a. Revenues for 2012: $ _______ b. Cost of Goods Sold for 2012: $ _______ c. Operating costs for 2012: $ ________
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