ISS Inc. began operations on January 1, 2012. It engaged in the following economic events during 2012:

Question:

1. Issued 6,000 shares of no-par common stock for $10 per share.

2. Purchased on account 20,000 units of inventory for $1 per unit.

3. Paid and capitalized $7,000 for rent covering 2012 and 2013.

4. Purchased furniture for $30,000, paving $20,000 in cash and signing a long-term note for the remaining balance.

5. Sold on account 8,800 units of inventory for $4 per unit

6. Paid one-half of the outstanding accounts payable.

7. Received $12,000 from customers on open accounts.

8. Paid miscellaneous expenses of $10,000 for the year

9. Depreciation recorded on the furniture totaled $5,000.

10. Accrued interest on the bag-term note payable amounted to $1,000.

11. Declared dividends of $3,000 at year-end to be paid in January 2013.

12. Recorded entry for $3,000 of rent expired during 2012.

Required

(a) Prepare journal entries for these events.

(b) Prepare an income statement, statement of shareholders’ equity, balance sheet, and statement of cash flows (indirect method).

(d) Assume that the company pays the outstanding accounts payable on the final day of 2012. Recompute working capital, the current ratio, and cash provided (used) by operating activities.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...