You are presented with a series of transactions for Alban Corp (\"Al\"). Assume

Question

You are presented with a series of transactions for Alban Corp ("Al"). Assume that these transactions are the only transactions that have occurred since the formation of the firm. Based on those transactions, prepare and submit each of the following financial statements for Al: 1. Comparative, Classified Balance Sheets as of 12/31/2013 and 12/31/2014. You cain find a number of acceptable Balance Sheet account titles in Chapter 6 (pages 226- 228) of the textbook. 2. Income Statement for the Year ended 12/31/2014. 2013 Transactions: 7/1/13: Al issues 8,000 shares of $2 par value Common Stock in return for $80,000 in cash. 1. 2. 8/1/13: Al pays for an insurance policy that covers the period 2/1/14 7/31/14. Al pays the entire $4,200 amount in cash on 8/1/13 3. 10/1/13: Al signs a contract to rent a building for 12 months at a rate of $1,200 month. The contract begins on 3/1/14. Al makes an initial payment of $6,000 and will pay the remainder of the rental fees at the end of the contract (2/28/15) 4. 10/1/13: Al signs an employment agreement with Jane Smith. Ms. Smith will begin working on 1/1/14, earning $180,000 per year. She will be paid on the 15th of each month for the prior month's work (e.g., her first paycheck will be issued on February 15th, as payment for January's services). [Assume all of these payments are made - they will not be shown explicitly in this list of transactions.] 5. 11/1/13: Al buys (and receives) 4,800 cases of merchandise inventory for $252,000 on account. 6. 11/15/13: Al receives $45,000 in cash from a customer for goods to be delivered in February 2014.

Explanation / Answer

Journal Entries 2013 Transaction Description Debit Credit 1 Cash A/c 80000 Common Stock ($2*8000 shares) 16000 Paid in capital in excess pf par value 64000 2 Prepaid Insurance A/c 4200 Cash A/c 4200 3 Prepaid rent account 6000 Cash A/c 6000 4 Wages payable A/c 165000 Cash A/c 165000 5 Inventory A/c 252000 Accounts payable 252000 6 Cash A/c 45000 Deferred Revenue 45000 2014 Transactions 1 Supplies A/c 6000 Accounts payable 6000 2 Accounts payable 18000 Cash A/c 18000 4 Accounts payable 5000 Cash 1000 5 Land A/c 39000 Legal Fees A/c 6000 Cash A/c 45000 6 Prepaid Expense A/c 3000 Cash 3000 7 Prepaid Expenses a/c 200000 Accounts payable 200000 8 Cash 40000 Notes payable 40000 9 Cash A/c 10000 Deferred Revenue A/c 10000

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