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ABC Corp. Balance Sheet As of December 31, 2018 Assets Liability Cash $6,000 Accounts Payable $3,000...

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.
  2. On May 1st, 2018, ABC Corp received $1,200 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 May 1st, 2018.
  3. On July 1st, 2018, ABC Corp paid $600 for a one-year insurance policy. The policy starts on July 1st, 2018 and ends on June 30th, 2019

a) Make journal entries for the following transactions.
b) Prepare the unadjusted trial balance.
c) Make the appropriate adjusting entries at year-end.
d) Prepare the adjusted trial balance
e) Make the appropriate closing entries. Hint: close it directly to retained earnings.

Solutions

Expert Solution

a) Make journal entries for the following transactions:

_______________________________________________________________

b) Prepare the unadjusted trial balance:

____________________________________________________

c) Make the appropriate adjusting entries at year-end:

_________________________________________________

d) Prepare the adjusted trial balance:

________________________________________________________

e) Make the appropriate closing entries:

Date Account Titles Debit Credit
Dec. 31 Service revenue $400
Retained Earnings $400
Dec. 31 Retained Earnings $600
Depreciation expense $300
Insurance expense $300

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ekkarill92 answered 1 year ago
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