A new corporation, ABC Corporation, was created on January 1 of the current year
ID: 2536369 • Letter: A
Question
A new corporation, ABC Corporation, was created on January 1 of the current year The following transcations occurred during the month of January of the current year: Date 1-Jan 1-Jan 1-Jan 1-Jan 5-Jan 7-Jan 10-Jan 10-Jan 11-Jan 14-Jan 31-Jan 31-Jan 31-Jan 31-Jan 31-Jan Amount The owners put money into the corporation checking account in exchange for shares of common stock The corporation rented a building and paid the first six months rent The corporation bought equipment and furniture on account The corporation hired employees who will be paid the following for each month worked on the 10th of the following month The corporation bought supplies and paid cash The corporation bought inventory and paid cash The corporation pays for advertising in the local newspaper and paid cash The corporaiton pays for one year of insurance and paid cash The corporation makes cash sales The corporation makes sales on account The corporaiton counts the inventory remaining at the end of the month The corporation counts the supplies remaining at the end of the month The corporation paid some of what it owed on account The corporation collects money owed to them on account The corporation decides to depreciate the furniture and equipment over 60 months 131,891 39,511 49,007 29,606 3,338 29,851 896 2,691 39,670 80,658 18,597 1,409 24,503 42,426 Required 1. Make the journal entries required for the month of January in the space below (56 points) 2. Make the adjusting entries required at the end of January in the space below (24 points) 3. Create an adjusted trial balance in the space below (5 points) 4. Create an income statement, statement of owners' equity, and balance sheet in the spaces below (15, 15, and 10 points)Explanation / Answer
Answers
Working has been shown wherever required, entries require no such explanations:
Date
Accounts Title
Debit
Credit
01-Jan
Cash
$ 1,31,891.00
Common Stock
$ 1,31,891.00
01-Jan
Prepaid rent
$ 39,511.00
Cash
$ 39,511.00
01-Jan
Equipment
$ 49,007.00
Accounts payable
$ 49,007.00
05-Jan
Supplies
$ 3,338.00
Cash
$ 3,338.00
07-Jan
Inventory
$ 29,851.00
Cash
$ 29,851.00
10-Jan
Advertising expense
$ 896.00
Cash
$ 896.00
10-Jan
Prepaid Insurance
$ 2,691.00
Cash
$ 2,691.00
11-Jan
Cash
$ 39,670.00
Sales Revenue
$ 39,670.00
14-Jan
Accounts receivables
$ 80,658.00
Sales Revenue
$ 80,658.00
31-Jan
Cost of Goods Sold
$ 11,254.00
Inventory
$ 11,254.00
[$29851 - $18597]
31-Jan
Supplies expense
$ 1,929.00
Supplies
$ 1,929.00
[$3338 - $1409]
31-Jan
Accounts payable
$ 24,503.00
Cash
$ 24,503.00
31-Jan
Cash
$ 42,426.00
Accounts receivables
$ 42,426.00
31-Jan
Depreciation expense
$ 816.78
Accumulated Depreciation
$ 816.78
[$49007 / 60months]
31-Jan
Rent Expense
$ 6,585.17
Prepaid Rent
$ 6,585.17
[$39511/6months]
31-Jan
Salaries expenses
$ 29,606.00
Salaries payable
$ 29,606.00
31-Jan
Insurance expense
$ 224.25
Prepaid Insurance
$ 224.25
[$2691/12 months]
Adjusted Trail balance
Debit
Credit
Cash
$ 1,13,197.00
Accounts receivables
$ 38,232.00
Prepaid Rent
$ 32,925.83
Supplies
$ 1,409.00
Inventory
$ 18,597.00
Prepaid Insuarnce
$ 2,466.75
Equipment
$ 49,007.00
Accum Depreciation
$ 816.78
Accounts payable
$ 24,504.00
Salaries payable
$ 29,606.00
Common Stock
$ 1,31,891.00
Sales Revenue
$ 1,20,328.00
Cost of Goods Sold
$ 11,254.00
Supplies expenses
$ 1,929.00
Rent Expense
$ 6,585.17
Depreciation expense
$ 816.78
Advertising expense
$ 896.00
Insurance expense
$ 224.25
Salaries expense
$ 29,606.00
TOTAL
$ 3,07,145.78
$ 3,07,145.78
Income Statement
Sales Revenue
$ 1,20,328.00
Cost of Goods Sold
$ 11,254.00
Gross Profit
$ 1,09,074.00
Operating expense:
Supplies expenses
$ 1,929.00
Rent Expense
$ 6,585.17
Depreciation expense
$ 816.78
Advertising expense
$ 896.00
Insurance expense
$ 224.25
Salaries expense
$ 29,606.00
Total operating expense
$ 40,057.20
Net Income
$ 69,016.80
Statement of Owner’s Equity
Common Stock
Retained earnings
Total Equity
Beginning Balance
$ -
$ -
$ -
Add: Issued/Contributed
$ 1,31,891.00
$ 1,31,891.00
Add: Net Income
$ 69,016.80
$ 69,016.80
Ending balance
$ 1,31,891.00
$ 69,016.80
$ 2,00,907.80
Balance Sheet
ASSETS
Cash
$ 1,13,197.00
Accounts receivables
$ 38,232.00
Prepaid Rent
$ 32,925.83
Supplies
$ 1,409.00
Inventory
$ 18,597.00
Prepaid Insurance
$ 2,466.75
Equipment
$ 49,007.00
Accum Depreciation
$ (816.78)
Total ASSETS
$ 2,55,017.80
LIABILITIES & EQUITY
Liabilities:
Accounts payable
$ 24,504.00
Salaries payable
$ 29,606.00
Total Liabilities
$ 54,110.00
Equity:
Common Stock
$ 1,31,891.00
Retained earnings
$ 69,016.80
Total Equity
$ 2,00,907.80
Total LIABILITIES & EQUITY
$ 2,55,017.80
Date
Accounts Title
Debit
Credit
01-Jan
Cash
$ 1,31,891.00
Common Stock
$ 1,31,891.00
01-Jan
Prepaid rent
$ 39,511.00
Cash
$ 39,511.00
01-Jan
Equipment
$ 49,007.00
Accounts payable
$ 49,007.00
05-Jan
Supplies
$ 3,338.00
Cash
$ 3,338.00
07-Jan
Inventory
$ 29,851.00
Cash
$ 29,851.00
10-Jan
Advertising expense
$ 896.00
Cash
$ 896.00
10-Jan
Prepaid Insurance
$ 2,691.00
Cash
$ 2,691.00
11-Jan
Cash
$ 39,670.00
Sales Revenue
$ 39,670.00
14-Jan
Accounts receivables
$ 80,658.00
Sales Revenue
$ 80,658.00
31-Jan
Cost of Goods Sold
$ 11,254.00
Inventory
$ 11,254.00
[$29851 - $18597]
31-Jan
Supplies expense
$ 1,929.00
Supplies
$ 1,929.00
[$3338 - $1409]
31-Jan
Accounts payable
$ 24,503.00
Cash
$ 24,503.00
31-Jan
Cash
$ 42,426.00
Accounts receivables
$ 42,426.00
31-Jan
Depreciation expense
$ 816.78
Accumulated Depreciation
$ 816.78
[$49007 / 60months]
31-Jan
Rent Expense
$ 6,585.17
Prepaid Rent
$ 6,585.17
[$39511/6months]
31-Jan
Salaries expenses
$ 29,606.00
Salaries payable
$ 29,606.00
31-Jan
Insurance expense
$ 224.25
Prepaid Insurance
$ 224.25
[$2691/12 months]
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