Question

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.

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