Question

For each accounting event, make the relevant entries in the balance sheet and the P & L. Remember that the starting point for each event is the prior balance sheet. In your P&L, use a tax rate of 21%. Fill in each table for each accounting event.

1. Company issues new shares for $2054.

2. Company takes out a loan, payable in 10 years for $3804

3. Company buys equipment for $3514.

4. Company buys brand-building / name recognition advertising with cash for $46.

5. Company buys raw materials with cash for $315.

6. Company takes $241 of raw materials, pays $160 in direct labor (from cash) to manufacture finished products.

7. Company sells $243 worth of finished products on credit for $486. It also pays sales commission of $5.

8. Company sells $158 worth of finished products for cash for $465. It also pays sales commission of $5.

9. Company pays salaries, $126.

10. Company pays utilities and rent, $76.

11. Company pays suppliers' invoives worth $0.

12. Company collects $465 worth of its outstanding invoices.

13. Company depreciates its equipment by $121.

14. Long term interest expense $380.

15. Company buys brand-building / name recognition advertising with cash for $48

16. Company buys raw materials with cash for $319.

17. Company takes $304 of raw materials, pays $203 in direct labor (from cash) to manufacture finished products.

18. Company sells $259 worth of finished products on credit for $517. It also pays sales commission of $5.

19. Company sells $218 worth of finished products for cash for $435. It also pays sales commission of $4.

20. Company pays salaries, $132.

21. Company pays utilities and rent, $79.

22. Company pays suppliers' invoives worth $0.

23. Company collects $435 worth of its outstanding invoices.

24. Company depreciates its equipment by $103.

25. Long term interest expense $380.

ASSETS			LIABILITIES
Current assets			Current liabilities
Cash	0		Accounts payable	0
Accounts receivable	0		Short-term_debt	0
Inventory			Non-current liabilities
Raw materials	0		Long-term_debt	0
Finished goods	0
Fixed_assets			EQUITY
PPE	0		Common_equity	0
Goodwill	0		Retained_earnings	0

Sales
COGS
Gross profit
SGA
Depreciation
EBIT
Interest
EBT
Tax
Net income

Answer 1

ASSETS			LIABILITIES
Current assets			Current liabilities
Cash	2621		Accounts payable	0
Accounts receivable	103		Short-term_debt	760
Inventory			Non-current liabilities
Raw materials	89		Long-term_debt	3804
Finished goods	30
Fixed_assets			EQUITY
PPE	3290		Common_equity	2054
Goodwill	0		Retained_earnings	-485
Total	6133		Total	6133
Sales	1903
COGS	878
Gross profit	1025
SGA	526
Depreciation	224
EBIT	275
Interest	760
EBT	-485
Tax
Net income	-485

Detailed Working:

Cash A/c
Particulars	Amt   Dr	Particulars	Amt   Cr
Stock	2054	Equipment	3514
Loan	3804	Raw Material	634
		Direct Labour	363
Sales	465	SalesComm	19
Sales	435	Salaries	258
Receivables	465	Utilities andRent	155
Receivables	435	Adevrtising	46
		Adevrtising	48
		Bal C/f	2621
Total	7658	Total	7658

PPE
Equipment	3514
Dep(103+121)	-224
Total	3290

SGA
Advertising	94
Salary	258
Sales Commission	19
Utilities andRent	155
Total	526

COGS
Less FG Sales Cost	401
Less FG Sales Cost	477
Total	878

Accounts Receivables
Credit Sales	486
Credit Sales	517
Less Collections	-465
Less Collections	-435
Total	103

Long term interest has been considered as a short term debt.