Question

ABC Co. organized as a proprietorship on January 1, 2019 and engaged in the following transactions during its first year of operation:

Jan 1: The owner invested SR 1,000,000 cash to start the company.

Jan 31: The company purchased a piece of machinery on credit for SR 10,000.

Feb1: It purchased a truck by paying SR 50,000 and borrowing the remaining SR 25,000 required to complete the transaction.

Feb 3: The company had cash revenue of SR 100,000

Feb 16: Purchased a land for SR 150,000 on account.

Feb 25: Sold the land after one month for SR 150,000.

Feb28: Borrowed SR 150,000 from a local bank.

Mar 6: Received an electricity expense invoice of SR 10,000 to be paid on April 15.

Mar 17: Paid SR 50,000 salaries for its employees in cash.

Apr 5: Paid a liability of SR 32,000.

Apr 8: The owner withdrew SR 40,000 cash.

Apr 15: paid the electricity expense invoice received on March 6.

Apr 20: Provided services for its clients for SR 320,000 on account.

Apr 22: Incurred 5,400 of advertising costs on account.

May 7: Collected an account receivable of SR 120,000

May 30: Purchased a computer on credit for SR 6,000.

June 25: Paid office rent in advance of SR 15,000 in cash, for the 6 months starting from July 1 till December 31, 2019.

July 1: Purchased some supplies to be used during the rest of the year for SR 1,000 on account.

July 25: Paid Dividends for the owner totaling SR 20,000.

Aug 1: Paid the advertising expenses incurred on April 22.

Oct 6: Received $30,000 for services to be performed during December 2019.

a.   Record each of these transactions (journalize).

b. Post the entries recorded.

c. Prepare a Trial balance at the end of December, 2019.

d.   Knowing that the useful life of the machinery is 5 years, the useful life of the computer is 4 years and the useful life of the truck is 15 years. Prepare the adjusting entries related to: (1.5 pt)

- The depreciation of the machinery, the truck and the computer.

- Office Rent - Supplies expense

- Service Revenue

e. Post the adjusting entries.

f. Prepare the adjusted Trial balance as of December 31, 2019.

g. Prepare the income statement, statement of Owner’s Equity and the balance sheet of ABC Co. as of December 2019.

h. Prepare the closing entries on December 31, 2019.

i. Prepare the after closing Trial Balance as of December 31, 2019.

Can you please help me do this homework, thank you.

Answer 1

a.

Date	Account Titles	Debit	Credit
		SR	SR
Jan 1	Cash	1,000,000
	Capital		1,000,000
Jan 31	Machinery	10,000
	Accounts Payable		10,000
Feb 1	Truck
	Cash		50,000
	Notes Payable		25,000
Feb 3	Cash	100,000
	Revenue		100,000
Feb 16	Land	150,000
	Accounts Payable		150,000
Feb 25	Cash	150,000
	Land		150,000
Feb 28	Cash	150,000
	Notes Payable		150,000
Mar 6	Utilities Expense	10,000
	Utilities Payable		10,000
Mar 17	Salaries Expense	50,000
	Cash		50,000
Apr 5	Accounts Payable	32,000
	Cash		32,000
Apr 8	Dividends	40,000
	Cash		40,000
Apr 15	Utilities Payable	10,000
	Cash		10,000
Apr 20	Accounts Receivable	320,000
	Revenue		320,000
Apr 22	Advertising Expense	5,400
	Accounts Payable		5,400
May 7	Cash	120,000
	Accounts Receivable		120,000
May 30	Computer	6,000
	Accounts Payable		6,000
June 25	Prepaid Rent	15,000
	Cash		15,000
July 1	Supplies	1,000
	Accounts Payable		1,000
July 25	Dividends	20,000
	Cash		20,000
Aug 1	Accounts Payable	5,400
	Cash		5,400
Oct 6	Cash	30,000
	Unearned Revenue		30,000

c.

Trial Balance December 31, 2019
Account Titles	Debit	Credit
	SR	SR
Cash	1,327,600
Accounts Receivable	200,000
Supplies	1,000
Prepaid Rent	15,000
Machinery	10,000
Truck	75,000
Computer	6,000
Accounts Payable		135,000
Unearned Revenue		30,000
Notes Payable		175,000
Capital		1,000,000
Dividends	60,000
Retained Earnings		0
Revenue		420,000
Salaries Expense	50,000
Advertising Expense	5,400
Utilities Expense	10,000
Totals	1,760,000	1,760,000

d.

Date	Account Titles	Debit	Credit
2019		SR	SR
Dec 31	Depreciation Expense	7,291
	Accumulated Depreciation : Machinery ( 10,000 / 5 * 11/12		1,833
	Accumulated Depreciation : Truck ( 75,000 / 15 * 11/12 )		4,583
	Accumulated Depreciation : Computer ( 6,000 / 4 * 7/ 12 )		875
Dec 31	Rent Expense	15,000
	Prepaid Rent		15,000
Dec 31	Supplies Expense	1,000
	Supplies		1,000
Dec 31	Unearned Revenue	30,000
	Revenue		30,000

f.

Adjusted Trial Balance December 31, 2019
Account Titles	Debit	Credit
	$	$
Cash	1,327,600
Accounts Receivable	200,000
Supplies	0
Prepaid Rent	0
Machinery	10,000
Accumulated Depreciation : Machinery		1,833
Truck	75,000
Accumulated Depreciation : Truck		4,583
Computer	6,000
Accumulated Depreciation : Computer		875
Accounts Payable		135,000
Unearned Revenue		0
Notes Payable		175,000
Capital		1,000,000
Dividends	60,000
Retained Earnings		0
Revenue		450,000
Salaries Expense	50,000
Supplies Expense	1,000
Rent Expense	15,000
Advertising Expense	5,400
Depreciation Expense	7,291
Utilities Expense	10,000
Totals	1,767,291	1,767,291