Question

TAKE HOME QUIZ

ABC Incorporated began operations on Jan 1^st, 2012 with an initial issuance of 10,000 shares,( each with par value $0.10), for $5 per share

1. On Jan 1^st, 2012, the company purchased a two-year fire insurance policy worth $10,000 and had paid it with cash.
2. Company purchased equipment worth $100,000 on Jan 1^st by signing a one-year Notes Payable. Interest rate on the loan was 8% and the interest and the entire principal will be paid on Jan 1^st 2013. The depreciation on equipment for the year 2012 was $20,000
3. On February 1^st, 2012 the company entered into a contract to provide consulting services. It received an advance of $120,000. The company performs 5% of the work for which it was contracted, every month.
4. On November 15^th, 2012, the company bought a piece of land for $200,000 by taking a 30-year mortgage loan.
5. On Dec 1^st, the company makes a mortgage payment $2,000 which was composed of $1,500 principal payment and $500 interest expense.
6. In 2012, the company purchased (in cash) and used up office supplies worth $20,000.
7. Company purchased Investments worth $20,000 on Apr 1^st 2012. The company receives 10% interest on its Investments annually on June 30^th
8. On Feb 15^th, 2012, the company bought toys inventory worth $90,000 on credit from its suppliers.
9. On March 20^th, 2012, the company sold toys for $180,000. The company received 50% cash and the rest remained on account. The cost of these toys sold was $40,000
10. The company’s franchisees owe ABC’s $800 in royalties for sales the franchisees made in the last week of December 2012.
11. Utilities expenses for the year 2012 were $10,000 and were paid in cash.
12. Wages accrued in the last week of 2012 were $2,000 and will be paid in the first week of 2013.
13. On December 15^th, 2012, the company declared cash dividends of $20,000 which will be paid sometime in 2013.

Required:

Prepare the journal entries (both regular and adjusting), trial balance, Income Statement, Statement of Retained Earnings and Balance Sheet for the year ending December 31^st 2012. Also create a T-Account for Cash.

Answer 1