1 Adomain Income Statement for Year ended December 31, Year 0 WN $190,500 4 Revenues 5 Sales Revenue 6 Expenses 7 Cost of Goods Sold 8 R&D Expense 9 Sales Commissions 10 Marketing Expense 11 Insurance Expense 12 Other Operating Expenses 13 Income from Operations 14 Interest Income 15 Income before Taxes 16 Income Tax Expense 17 Net Income 18 (110,500) (10,000) (2,000) (5,000) (6,000) (27,500) $29,500 500 30,000 (9,500) 20,500 AN 1 Adomain Balance Sheet 2 As of December 31, Year 0 3 4 Assets 5 Cash $100,000 6 Marketable Securities 7,700 7 Accounts Receivable 25,000 8 Inventory 21,000 9 PP&E (net) 36,400 10 Land 11,500 11 Other Long-Term Assets 17,000 12 Total Assets $218,600 13 14 Liabilities & Equity 15 Accounts Payable $51,000 16 Notes Payable: 39,500 17 Unearned Revenue 50,000 18 Income Tax Payable 6,700 19 Common Stock 51,000 20 Retained Earnings 20,400 21 Total Liabilities & Equity $218,600 22 23 Assume these notes represent non-interest-bearing loans from owners, due in 5 years. 24 25 Year 1 Transactions for Adomain Trinction Date Event 1 January 1 Paid last year's income tax liability 2 March 31 Sold inventory on account for S1575000). The cost of the inventory was $17.2000). Also, paid a sales commission on this sale of 512.000). 3 April Prepaid $26,200 for insurance for the next 12 months and recorded the transaction as an asset 4 April Paid $25,500 in cash for equipment (CPRE). 3 April Purchased inventory for $26.000 paid $6.500 in cash and recorded an Accounts Payable for the remaining balance 6 April Received 550,000 in cash related to the receivable recorded on March 31 7 May 1 Paid off counts payable related to the purchase of inventory on April 1. May 1 Received $42,000 in cash in advance for services. The service will be provided over the course of 6 months beginning on Oct 1 of this year, 9 June 30 Paid $30,000 in cash for expenses related to new products: $15,700 for research and development of the products (o) and S14,300 for marketing to advertise them (b) 100 July 31 Purchased supplies for S14,000 in cash. The accountant accidendly debited Accounts Receivable instead of the appropriate account 300 July 31 The accountant recorded an adjustment to correct the entry made in 10 (so that the accounts will reflect what should have been recorded Sep 10 Purchased marketable securities for $11,000 inch 12 October Horrowed $80,000 from a local bunk and signed a Seaf nate puyable promising to pay of interest per year interest is due and recorded in De 13 (October Paid 534 400 in cath to buy a plot of land for use as a parking lot 14 October und Common Stock worth $21,000 for cask 15 Dec 1 Salines of general officers were $20,000. The company paid 59.000 now and the remainder will be paid on Jan 1 Year 2 16 Dee 11 Income Tax for Year 1 51600, 99,000 is paid this year and the remainder will be paid on Aprill of Year 2 17 De 1 Record the appropriate adjusting entry related to earned revenue from May 1 (Transaction 8) (Doc 31 Record the appropriate adjusting entry related to the rand described in transaction 19 De 31 $100 of supplies are still on hand on Dec. Record the norocitate adjusting entry to reflect the supplies left on had. (Refer to transaction 101 Dec 31 Record the appropriate adjusting entry related to the note payable described in transaction 12 (suming interest will be paid in year 2). ! 18 20 Transaction Analysis To M Pupa C Lal One Town E M 1 AT FIL 1 cho WINTE 012 3 E + 1 RE M WIP KI TE 1. 1 CH 14. 18 je 13 TH TU Tu . WE ti TU WE B D F G H 2 General Journal Please do NOT ADD or DELETE rows! If you need multiple entries for one transaction, skip a row between entries. Transaction Date Account Title Description Debit 1 Jan. 1 Income Tax Expense 6,700 Cash Credit 6,700 20 157,500 Mar. 31 Accounts Recievable Retained Earnings 157,500 26 17,200 Mar. 31 Retained Earnings Inventory 17.200 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2c 12,600 Mar. 31 Sales Commision Cash 12,600 3 28,200 Apr. 1 Prepaid Insurance Cash 28,200 4 2$ 500 Ape 1 Fquipment Expense Cash 25,500 26,000 Apr 1 Inventory Expense Cash Accounts Payable 6,500 19.500 25 Apt Cash 30,000 Accounts Recievable 50,000 7 19.500 May l Accounts Payable Cash 19,500 26 27 28 29 30 31 32 33 34 35 36 37 38 42,000 May I Cash Uncamed Revenue 42,000 9a 15,700 June 30 Research & Development Expense Cach 15.700 E Instructions Yr O Income Statement E54 Jx 24000 00 C D E F G HIJ 95 14,300 June 30 Advertising Expense Cash 14,300 10a 14,000 Jul 31 Accounts Recievable Cash 14,000 10b 14,000 Jul. 31 Supplies Expense Accounts Recievable 14,000 11 Sept. 30 Marketable Securities 11.000 Cash 11,000 12 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 80,000 80,000 13 24,000 24,000 Bought market securities in cash Oct. 1 Cash Notes Payable borrowed cash and signed note payable Oct. I Land Cash Paid cash to buy land Oct. I Cash Common Stock issued stock for cash Dec. 1 Salaries Expense Salaries Payable Cash 14 21,000 21,000 15 21,000 12,000 9,000 16 11,600 Dec.31 Income Tax expense Income Tax Payable Cash 2.600 9,000 66 67 68 69 70 71 72 ADJUSTING ENTRIES 17 21,000 Dec 31 Service Revenue Uneamed Revenue 21.000 18 21,150 Dec. 31 Insurance Expense Prepaid Insurance 21:150 19 Dec 31 Supplies Expense Supplies A Instructions 13,200 13.200 Yr Income Statement - E B F G HIJ D Income Tax Payable 2,600 9,000 Cash ADJUSTING ENTRIES 17 21,000 65 66 67 68 69 70 71 72 73 74 Dec. 31 Service Revenue Uneamed Revenue 21,000 18 21,150 Dec. 31 Insurance Expense Prepaid Insurance 21.150 19 13,200 Dec. 31 Supplies Expense Supplies 13,200 1,200 Dec. 31 Interest Expense Interest Payable 1,200 78 20 79 80 CLOSING ENTRIES 81 82 83 84 85 86 2 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 11 8 M N o P Sales Exene 1 2 3 4 5 100.000 Geneci Joumal 15 D E GH 1 0 K L FORMULAS MUST BE USED. DO NOT HARD CODE ANY NUMBER. PPAE (net) Taterest Payable BA 6700 12.00 2.300 25,500 7 ER FR 5000 19,500 Common Stock Martin 9 10 11 12 13 Land 34,000 12.000 BB BB BB 15,700 14,300 14.000 Other LT A Retained aninge Service Reve BB BR 15 16 17 18 19 20 21 22 23 24 25 HR Marketable Securities 7,700 11,000 JES HR 18.700 Ace Payable Sales Reven Red Expo 27 28 Active 25,000 157,500 50,000 14.000 146,500 30 31 32 3 Supplies Notes Payable Cow of loods Sold RB Inventary Instructions Yr O Income Statement Yr 0 Balance Sheet Transactions General Journal General Ledger (T-Acco Calculation Mode: Automatic Workbook Statistics C D G H ER ER 30 14.000 146.500 Notes Payable Cost of Code Sell Supplies Home BB 22 33 In 21.600 2.000 ER ER 35 36 37 38 39 40 Uncat even Sales Com Interest 18 BH 0 20300 42 21,150 44 45 2. Income Tax Payable RAD pense Income Tax HR 47 14,000 49 SO EH FH 52 53 Salaries Payable 57 58 59 50 ER 1 Adomain Income Statement for Year ended December 31, Year 0 WN $190,500 4 Revenues 5 Sales Revenue 6 Expenses 7 Cost of Goods Sold 8 R&D Expense 9 Sales Commissions 10 Marketing Expense 11 Insurance Expense 12 Other Operating Expenses 13 Income from Operations 14 Interest Income 15 Income before Taxes 16 Income Tax Expense 17 Net Income 18 (110,500) (10,000) (2,000) (5,000) (6,000) (27,500) $29,500 500 30,000 (9,500) 20,500 AN 1 Adomain Balance Sheet 2 As of December 31, Year 0 3 4 Assets 5 Cash $100,000 6 Marketable Securities 7,700 7 Accounts Receivable 25,000 8 Inventory 21,000 9 PP&E (net) 36,400 10 Land 11,500 11 Other Long-Term Assets 17,000 12 Total Assets $218,600 13 14 Liabilities & Equity 15 Accounts Payable $51,000 16 Notes Payable: 39,500 17 Unearned Revenue 50,000 18 Income Tax Payable 6,700 19 Common Stock 51,000 20 Retained Earnings 20,400 21 Total Liabilities & Equity $218,600 22 23 Assume these notes represent non-interest-bearing loans from owners, due in 5 years. 24 25 Year 1 Transactions for Adomain Trinction Date Event 1 January 1 Paid last year's income tax liability 2 March 31 Sold inventory on account for S1575000). The cost of the inventory was $17.2000). Also, paid a sales commission on this sale of 512.000). 3 April Prepaid $26,200 for insurance for the next 12 months and recorded the transaction as an asset 4 April Paid $25,500 in cash for equipment (CPRE). 3 April Purchased inventory for $26.000 paid $6.500 in cash and recorded an Accounts Payable for the remaining balance 6 April Received 550,000 in cash related to the receivable recorded on March 31 7 May 1 Paid off counts payable related to the purchase of inventory on April 1. May 1 Received $42,000 in cash in advance for services. The service will be provided over the course of 6 months beginning on Oct 1 of this year, 9 June 30 Paid $30,000 in cash for expenses related to new products: $15,700 for research and development of the products (o) and S14,300 for marketing to advertise them (b) 100 July 31 Purchased supplies for S14,000 in cash. The accountant accidendly debited Accounts Receivable instead of the appropriate account 300 July 31 The accountant recorded an adjustment to correct the entry made in 10 (so that the accounts will reflect what should have been recorded Sep 10 Purchased marketable securities for $11,000 inch 12 October Horrowed $80,000 from a local bunk and signed a Seaf nate puyable promising to pay of interest per year interest is due and recorded in De 13 (October Paid 534 400 in cath to buy a plot of land for use as a parking lot 14 October und Common Stock worth $21,000 for cask 15 Dec 1 Salines of general officers were $20,000. The company paid 59.000 now and the remainder will be paid on Jan 1 Year 2 16 Dee 11 Income Tax for Year 1 51600, 99,000 is paid this year and the remainder will be paid on Aprill of Year 2 17 De 1 Record the appropriate adjusting entry related to earned revenue from May 1 (Transaction 8) (Doc 31 Record the appropriate adjusting entry related to the rand described in transaction 19 De 31 $100 of supplies are still on hand on Dec. Record the norocitate adjusting entry to reflect the supplies left on had. (Refer to transaction 101 Dec 31 Record the appropriate adjusting entry related to the note payable described in transaction 12 (suming interest will be paid in year 2). ! 18 20 Transaction Analysis To M Pupa C Lal One Town E M 1 AT FIL 1 cho WINTE 012 3 E + 1 RE M WIP KI TE 1. 1 CH 14. 18 je 13 TH TU Tu . WE ti TU WE B D F G H 2 General Journal Please do NOT ADD or DELETE rows! If you need multiple entries for one transaction, skip a row between entries. Transaction Date Account Title Description Debit 1 Jan. 1 Income Tax Expense 6,700 Cash Credit 6,700 20 157,500 Mar. 31 Accounts Recievable Retained Earnings 157,500 26 17,200 Mar. 31 Retained Earnings Inventory 17.200 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2c 12,600 Mar. 31 Sales Commision Cash 12,600 3 28,200 Apr. 1 Prepaid Insurance Cash 28,200 4 2$ 500 Ape 1 Fquipment Expense Cash 25,500 26,000 Apr 1 Inventory Expense Cash Accounts Payable 6,500 19.500 25 Apt Cash 30,000 Accounts Recievable 50,000 7 19.500 May l Accounts Payable Cash 19,500 26 27 28 29 30 31 32 33 34 35 36 37 38 42,000 May I Cash Uncamed Revenue 42,000 9a 15,700 June 30 Research & Development Expense Cach 15.700 E Instructions Yr O Income Statement E54 Jx 24000 00 C D E F G HIJ 95 14,300 June 30 Advertising Expense Cash 14,300 10a 14,000 Jul 31 Accounts Recievable Cash 14,000 10b 14,000 Jul. 31 Supplies Expense Accounts Recievable 14,000 11 Sept. 30 Marketable Securities 11.000 Cash 11,000 12 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 80,000 80,000 13 24,000 24,000 Bought market securities in cash Oct. 1 Cash Notes Payable borrowed cash and signed note payable Oct. I Land Cash Paid cash to buy land Oct. I Cash Common Stock issued stock for cash Dec. 1 Salaries Expense Salaries Payable Cash 14 21,000 21,000 15 21,000 12,000 9,000 16 11,600 Dec.31 Income Tax expense Income Tax Payable Cash 2.600 9,000 66 67 68 69 70 71 72 ADJUSTING ENTRIES 17 21,000 Dec 31 Service Revenue Uneamed Revenue 21.000 18 21,150 Dec. 31 Insurance Expense Prepaid Insurance 21:150 19 Dec 31 Supplies Expense Supplies A Instructions 13,200 13.200 Yr Income Statement - E B F G HIJ D Income Tax Payable 2,600 9,000 Cash ADJUSTING ENTRIES 17 21,000 65 66 67 68 69 70 71 72 73 74 Dec. 31 Service Revenue Uneamed Revenue 21,000 18 21,150 Dec. 31 Insurance Expense Prepaid Insurance 21.150 19 13,200 Dec. 31 Supplies Expense Supplies 13,200 1,200 Dec. 31 Interest Expense Interest Payable 1,200 78 20 79 80 CLOSING ENTRIES 81 82 83 84 85 86 2 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 11 8 M N o P Sales Exene 1 2 3 4 5 100.000 Geneci Joumal 15 D E GH 1 0 K L FORMULAS MUST BE USED. DO NOT HARD CODE ANY NUMBER. PPAE (net) Taterest Payable BA 6700 12.00 2.300 25,500 7 ER FR 5000 19,500 Common Stock Martin 9 10 11 12 13 Land 34,000 12.000 BB BB BB 15,700 14,300 14.000 Other LT A Retained aninge Service Reve BB BR 15 16 17 18 19 20 21 22 23 24 25 HR Marketable Securities 7,700 11,000 JES HR 18.700 Ace Payable Sales Reven Red Expo 27 28 Active 25,000 157,500 50,000 14.000 146,500 30 31 32 3 Supplies Notes Payable Cow of loods Sold RB Inventary Instructions Yr O Income Statement Yr 0 Balance Sheet Transactions General Journal General Ledger (T-Acco Calculation Mode: Automatic Workbook Statistics C D G H ER ER 30 14.000 146.500 Notes Payable Cost of Code Sell Supplies Home BB 22 33 In 21.600 2.000 ER ER 35 36 37 38 39 40 Uncat even Sales Com Interest 18 BH 0 20300 42 21,150 44 45 2. Income Tax Payable RAD pense Income Tax HR 47 14,000 49 SO EH FH 52 53 Salaries Payable 57 58 59 50 ER