ABC Inc.s fiscal year-end is December 31 and the company uses the periodic inventory method.

2019 Transactions

1. On October 28, 2019, ABC Inc. was incorporated to begin operating a new retail business.

2. On November 3, 2019, four new owners transferred $40,000 cash to the corporation for 4,000 shares (1,000 shares each owner).

3. A building was purchased for $28,000 on December 14, 2019, for use beginning in 2020. It is expected to have a 20-year life with $5,000 salvage.

4. Equipment costing $6,000 was purchased on December 16, 2019, for use beginning in 2020. It is expected to last 5 years with a $1,000 salvage value.

5. The firm arranged to borrow $10,000 from the bank by signing a note paying 7% interest and effective December 31, 2019, due December 31, 2021.

Required for 2019 (see next page for what is required to be turned in to Canvas)

1. Write journal entries for each transaction.

2. Post each transaction to a general ledger (T-account or spreadsheet format) and prepare the trial balance.

3. Prepare the basic financial statements for the year.

2020 Transactions

1. During 2020, $121,000 in sales were made on the account. Collections from customers were $102,000 for the year.

2. During 2020, $84,000 in inventory purchases were made on the account. Payments to vendors were $71,000 for the year.

3. During 2020, $20,000 in salary cost was incurred from employees working. The salary paid was $18,000 for the year.

4. On January 2, 2020, 15 months of rent was paid in advance for $15,000. 12 months were used during 2020.

5. On June 30, 2020, 1,000 new shares of common stock were issued in exchange for $12,000 cash.

6. On September 9, 2020, land to open a new store is purchased for $14,000 cash.

7. On December 31, 2020, the loan is repaid with interest.

8. Equipment and building were used during 2020 & depreciation recorded (the building used SL, equipment DDB [Double Declining Balance, i.e. 2 times the SL rate).

9. Inventory is counted and $17,000 remains unsold on December 31, 2020.

10. The income tax rate is 40%.

Required for 2020 (see next page for what is required to be turned in to Canvas)

1. Write journal entries for each transaction as well as year-end adjusting entries.

2. Post each transaction to a general ledger (T-account or spreadsheet format) and prepare the adjusted trial balance.

3. Prepare the basic financial statements for the year.

2021 Transactions

1. In 2021, a new gift card program was started and customers purchased $32,000 in gift cards (i.e. deferred revenue).

2. During 2021, $147,000 in sales were made on the account. Collections of AR from customers were $143,000 for the year.

3. During 2021, $113,000 in inventory purchases were made on the account. Payments to vendors were $117,000 for the year.

4. During 2021, $31,000 in salary cost was incurred from employees working. The salary paid was $32,000 for the year.

5. On March 15, 2021, income taxes accrued in 2020 were paid.

6. On March 31, 2021, 10 months of rent was paid in advance for $10,000. 12 months were used during 2021.

7. On October 1, 2021, excess land is sold for $4,000; the land was previously purchased in 2020 at a cost of $3,000.

8. On November 1, 2021, a $2 per share dividend is declared, record date November 15, and payment date December 1, 2021.

9. Equipment and building were used during 2021 & depreciation recorded (the building used SL, equipment DDB)

10. Inventory is counted and $21,000 remains unsold on December 31, 2021.

11. The income tax rate is 40%.

Required for 2021 (see next page for what is required to be turned in to Canvas)

1. Write journal entries for each transaction as well as year-end adjusting entries.

2. Post each transaction to a general ledger (T-account or spreadsheet format) and prepare the adjusted trial balance.

3. Prepare the basic financial statements for the year.

Excel Homework #2

Required:

Prepare and turn in Journal Entries for the first & second years (2019 & 2020) using Excel.

Prepare and turn in the Adjusted Trial Balance for the first & second years (2019 & 2020) using Excel.

Prepare and turn in financial statements for the first & second years (2019 & 2020) using Excel.

Although you will need to prepare a General Ledger, closing entries, and post-closing Trial Balances, do not submit them to Canvas. It will be obvious from your Journal Entries, Adjusted Trial Balances, and Financial Statements whether or not you properly maintained these records.

Notes on Financial Records

Journals Journal entries should be kept by year. Entries can be classified as transactions or adjustments, but the classification is not required.

Adjusted Trial Balance - The Adjusted Trial Balance should have 2 columns, one for debits and one for credits. There should be no negative numbers in the Adjusted Trial Balance. Each year should have a separate Adjusted Trial Balance. Totals at the bottom of each column should demonstrate balancing.

Closing entries should be made and post-closing balances kept. Totals at the bottom of the post-closing trial balance should demonstrate balancing.

General Ledger - can be in either T-account form or in spreadsheet columnar form by account. You should demonstrate balancing in your general ledger (i.e. show how the total debits equal the total credits).

Financial Statements Comparative financial statement presentation is preferred. Balance Sheets, Income Statements & Statements of Cash Flows are required.