Question

ABC Corp. Balance Sheet As of December 31, 2018

Assets				Liability
Cash		$6,000		Accounts Payable		$3,000
Accounts Receivable		$4,000
				Stockholders' Equity
				Common Stock		$3,000
				Retained Earnings		$4,000
				Total Liability and Stockholders' Equity
Total Assets		$10,000				$10,000

1. On January 1st, 2019, ABC Corp bought an equipment for $2,000. The equipment has a useful life of 5 years and has a salvage value of $500. The company uses double-declining depreciation method.

2. On March 1 st, 2019, ABC Corp received $2,400 cash for services to be performed in the future. The service agreement is for a period of two years and the service will be performed evenly throughout the two-year period starting from March 1 st, 2019.

3. On July 1st, 2019, ABC Corp paid $600 for a one-year insurance policy. The policy starts on July 1st, 2019 and ends on June 30th, 2020

Please indicate whether an account is an asset (A), liability (L), or equity (E) for journal entries, adjusting entries, and closing entries to receive full credits.

⚫ Make journal entries for the follow transactions. (1 point each)

⚫ Prepare the unadjusted trial balance. (1 point)

⚫ Make the appropriate adjusting entries at year end. (1 point each)

⚫ Prepare the adjusted trial balance (1 point)

⚫ Make the appropriate closing entries. Hint: close it directly to retained earnings. (1 point each)

Answer 1

If find the answer useful please like the answer
Date	Account title and Explanation	Debit $	Credit $
January 1	Equipment	2,000
	Cash		2,000
	(To record the purchase of equipment for cash)
March 1	Cash	2,400
	Unearned Service Income		2,400
	(To record the advance receipt from customer for service to be performed over a period of two year)
July 1	Prepaid Insurance	600
	Cash		600
	(To record the prepaid insurance)
	ABC Corp.
	Unadjusted Trial Balance
	Account Name	Debit $	Credit $
	Cash	5,800
	Accounts Receivable	4,000
	Prepaid Insurance	600
	Equipment	2,000
	Accounts Payable		3,000
	Unearned Service Income		2,400
	Common Stock		3,000
	Retained Earning		4,000
	Total	12,400	12,400
Date	Account title and Explanation	Debit $	Credit $
December 31	Depreciation Expenses -Equipment	600
	Accumulated Depreciation - Equipment		600
	(To record the depreciation for the year)
December 31	Unearned Service Income	1,000
	Service Income		1,000
	(To record the service income from March 1 to December 31)
December 31	Insurance Expenses	300
	Prepaid Insurance		300
	(To record the prepaid insurance)
	ABC Corp.
	Unadjusted Trial Balance
	Account Name	Debit $	Credit $
	Cash	5,800
	Accounts Receivable	4,000
	Prepaid Insurance	300
	Equipment	2,000
	Accumulated Depreciation - Equipment		600
	Accounts Payable		3,000
	Unearned Service Income		1,400
	Common Stock		3,000
	Retained Earning		4,000
	Service Income		1,000
	Depreciation Expenses -Equipment	600
	Insurance Expenses	300
	Total	13,000	13,000
Date	Account title and Explanation	Debit $	Credit $
December 31	Income Summary	900
	Depreciation Expenses -Equipment		600
	Insurance Expenses		300
	(To record the closing the expenses accounts)
December 31	Service Income	1,000
	Income Summary		1,000
	(To record the closing the service income)
December 31	Income Summary	100
	Retained Earning		100
	(To record the closing of income summary account)