Question

In: Accounting

Balance Sheet Assets: 12/31/19 Current Assets: Cash $3,000.00 Accounts Receivable 1,250.00 Prepaid Expenses $100.00 Total Current...

Balance Sheet

Assets: 12/31/19

Current Assets:

Cash $3,000.00

Accounts Receivable 1,250.00

Prepaid Expenses $100.00

Total Current Assets $4,350.00

Non-Current Assets:

Property, Plant, and Equipment

Land $10,000.00

Buildings 25,000.00

Equipment 15,000.00

Accumulated Depreciation $(12,000.00)

Total Property, Plant, and Equipment $38,000.00

Total Assets $42,350.00

Liabilities:

Current Liabilities

Accounts Payable $100.00

Accrued Expense 150.00

Salary and Wages Payable -

Notes Payable -

Unearned Revenue $1,500.00

Total Liabilities $1,750.00

Shareholder's Equity

Common Stock - $1 par (See Note Below) $15,000.00

Retained Earnings $25,600.00

Total Equity $40,600.00

Total Liabilities and Equity $42,350.00

Transactions during January 2020:

1. On January 2, 2020, ACC executed a 3 month- 6% promissory note for $10,000.00 in favor of its

bank, Cheatem Trust Company, Inc. for working capital purposes.

7. Depreciation expense for the month of January was $1,000.00

8. January service revenue for the Company is $21,000.00. All revenues are recorded as "on account."

9. ACC reviewed its work product for January and determined that it had performed $500.00 of the

services required that were being accounted for as unearned revenue in addition to revenues

described in transaction 8.

10. ACC recorded interest expense associated with the Note Payable described in transaction 1.

NOTE: Other events possibly having an effect on the company:

At the end of January, the Board of Directors voted to shut down and liquidate a component of the

company's operations. This represents a strategic shift in their operations. The component experienced

a 2,100 loss during January. This was partially offset by a $1,200 gain on the disposition of the assets.

Both of these transactions are net of tax and have already been appropriately reflected in the

Retained Earnings balance shown on the December 31, 2019 Balance Sheet.

Note 14 of ACC's financial statements for the year ended 12/31/19 indicates the company's

effective tax rate to be 25%.

The company's common stock account includes 100,000 shares authorized, 1,000 shares issued

and outstanding.

Required:

On separate sheets of paper, please:

Prepare the appropriate journal entries associated with the above transactions. It is not necessary to

prepare journal entries associated with the discontinued component.

Prepare a "T" account depiction of the Company's General Ledger activity for the

month of January 2020.

Prepare ACC's Income Statement for the month ending January 31, 2020

Prepare ACC's Balance Sheet at January 31, 2020.

Solutions

Expert Solution

Solution:

.

Journal entries

.

.

.

Ledger

.

.

.

Income Statement for the month ending January 31, 2020

.

.

.

Balance Sheet at January 31, 2020

.

.

ekkarill92 answered 2 years ago
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