The following transactions apply to Baker Co. for 2010, its first year of operat
ID: 2469091 • Letter: T
Question
The following transactions apply to Baker Co. for 2010, its first year of operations.
1. Issued $180,000 of common stock for cash.
2. Provided $88,000 of services on account.
3. Collected $74,000 cash from accounts receivable.
4. Loaned $13,000 BBC on September 1, 2010. The note had a one-year term to maturity and an 8 percent interest rate.
5. Paid $36,000 of salaries expense for the year.
6.Paid a $3,500 dividend to the stockholders.
7. Recorded the accrued interest on December 31, 2010 (see item 4).
8. Uncollectible accounts expense is estimated to be 1 percent of sales on account.
Required:
a. Record the above transactions in general journal form.
b. Post the entries to T-accounts.
c. Prepare the income statement, balance sheet, and statement of cash flows for 2010.
d. Show the effects of the above transactions in a horizontal statements model.
Explanation / Answer
journal entries:
Income Statement
Less: Expenses:
Balance Sheet:
Cash Account is the Cash Flow Statement being single year
d: horizontal statements model:
Date Accounts Title and explanation Debit $ Credit $ 1 Cash 180000 Common Stock 180000 2 Accounts Receivable 88000 Service revenue 88000 3 Cash 74000 Accounts Receivable 74000 4 Cash 13000 Note Payable 13000 5 salaries expense 36000 Cash 36000 6 Dividend 3500 Cash 3500 7 Interest Expense 347 Interest Payable 347 8 Bad Debts 880 Allowance for Doubtful Accounts 880 (88000 * 1%) T- ACCOUNTS ENTRIES Cash 180000 36000 74000 3500 13000 C. Balance 227500 267000 Total 267000 common stock 180000 Accounts Receivable 88000 74000 C balance 14000 88000 Total 88000 Service Revenue 88000 Note Payable 13000 Salaries Expense 36000 Dividend 3500 Interest Expense 347 Interest Payable 347 Bad Debts 880 Allowance for Doubtful Accounts 880Related Questions
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