ABC Corporation was formed at the beginning of last year. The balances on its post-closing trial balance prepared on December 31, at the end of its first year of operations, were as follows: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Prepaid Rent Equipment Accumulated Depreciation Accounts Payable Salaries and Wages Payable Deferred Revenue Interest Payable Note Payable (long-term) Common Stock Additional Paid-In Capital, Common Retained Earnings 21,000 10.000 200 10,500 1,200 25,000 2.400 2,500 4,000 300 20,000 12,000 18,000 8,300 The following information is relevant to the first month of operations in the following year ABC sells its inventory at $200 per unit. ABC's January 1 inventory balance consists of using a perpetual inventory system. 140 units at a total cost of $10,500. ABC's policy is to use the FIFO method, recorded The $1.200 in Prepaid Rent relates to a payment made in December for January rent this year The equipment was purchased on July 1 of last year. It has a residual value of $1,000 and an expected life of five years. It is being depreciated using the straight-line method. Deferred Revenue is for 20 units ordered and paid for in advance by two customers in late February Notes Payable arises from a three-year, 6 percent bank loan received on October 1 last December. One order of 15 units is to be filled in January, and the other will be filled in ear The par value on the common stock is $2 per share. January Transactions: a. On 101, ABC paid employees' salaries and wages that were previously accrued on December 31 A truck is purchased on 1/02 for $10,000 cash. It is estimated this vehicle will be used for 50,000 miles, after which it will have no residual value. b. c. ABC declares a $0.50 cash dividend on each share of common stock on 1/04, to be paid on 1/10 d. AS105 customer account is written off as uncollectible on 1105 e. On 106, recorded sales of 100 unils of inventory on account. f. Collections from customers on account, totaling $9,500, are recorded on 1/09. g. On 1/10, ABC distributes the $0.50 cash dividend declared on January 4. The company's stock price is currently $10 per share h. ABC purchases on account and receives 75 units of inventory on 1/11 for $4,875. i. The equipment purchased last year for $25,000 is sold on 1/15 for $20,000 cash. Record depreciation for the first half of January prior to recording the equipment disposal. Payroll for January 1-15 is recorded and paid on 1/16. paid is $20,360, which includes interest accrued in December and an additional $60 k. Having sold the equipment, ABC pays off the note payable in full on 1/18. The amount interest through January 18. l. On 1127, ABC records sales of 45 units of inventory on account. m. A portion of the advance order from December (15 units) is delivered on 1/29. n. To obtain funds for purchasing new equipment, ABC issued bonds on 1130 with a total face value of $90,000, stated interest rate of 5 percent, annual compounding, and six-year maturity date. ABC received $81,420 from the bond issuance, which implies a market interest rate of 7 percent o. On 1/31, ABC records units-of-praduction depreciation on the vehicle (truck), which was driven 2,100 miles this month p, ABC estimates that 2% of the ending accounts receivable balance will be uncollectible. Adjust the applicable accounts on 1/31, using the allowance method. Round to the nearest whole dollar q. On 1131, adjust for January rent expired. r. Accrue January 31 payroll on 1131, which will be payable on February 1
