ABC COMPANY TRANSACTION ANALYSIS

The ABC Company had the following transactions in 2021, the first year of its operations:

1. Issued 10 shares of stock at $6 per share;

2. Borrowed $100;

3. Purchased building for $100;

4. Purchased inventory on credit for $60;

5. Paid supplier $40;

6. Company president sold 2 shares of ABC stock from his personal holding;

7. As a favor to the company president, Robert Redford displayed the company logo in his

   movie;

8. Sold merchandise for $80 on credit;

9. Cost of the merchandise sold in (8) is $50;

10. Salary paid to managers, $5;

11. Use of building (useful life = 18 years, salvage value = $10);

12. Interest expense on loan @ 5%;

13. Dividends declared and paid, $5.

Required:

A. Record these business transactions using the spreadsheet template. B. Prepare: (1) an income statement, (2) a statement of retained earnings, (3) a balance sheet,

and (4) a statement of cash flows for the first year of the ABC Company.

Transaction Analysis (Spreadsheet Method) Transacton Analysis of ABC Co Cash ASSETS Accounts Inventories Building Receivable 0 0 0 LIABILITIES Accounts Notes Payable Payable 0 0 OWNERS' EQUITY Paid-in Retained Capital Earnings 0 0 0 Beginning Balances as of 12/31/2020 Transaction Description 1 Issued stocks 10 @ $6 2 Borrowed $100 3 Purchased building for $100 4 Purchased inventory on credit for $60 5 Paid supplier $40 6 Company president sold 2 shares of ABC from his personal holding As a favor to the company president, Robert Redford displayed the company logo in his movie 7 8 Sold merchandise for $80 on credit 9 Cost of the merchandise sold in (8) is $50 10 Salary paid to managers, $5 11 Use of building (useful life=18 yrs, salvage value=$10) 12 Interest expense on loan @ 5% 13 Dividends declared and paid, $5 Ending Balances as of 12/31/2021 0 0 0 0 0 0 0