ACCT 501 Final

Summer 2019

Company ABC has the following balance for its balance sheet accounts at the end of 2018:

Cash - $50,000

Inventory - $10,000 (10000 pairs of socks at $1 each)

Accounts Receivable - $20,000

Allowance for Doubtful Accounts - $2,000 (credit balance)

Equipment - $50,000 (useful life 10 years, 0 residual value)

Accumulated Amortization - Equipment - $17,500

Accounts Payable - $3,000

Unearned Revenue - $5,000

GST Payable - $500

Retained Earnings - $20,000

Company ABC using straight line method to estimate amortization expenses and 1% of total sales to

estimate bad debt expenses, and FIFO for its inventory.

In 2019 following happened:

1. Customer 222 ordered and paid 15,000 pair of socks at $6/pair with GST

2. ABC purchased 20,000 pairs of socks at $1.5/pair with GST

3. ABC paid balance owing to CRA and its supplier

4.

ABC shipped 1,000 pair of socks to its customer 111 who paid in 2018 (no other undelivered

orders from 2018)

5.

ABC had to write-off $500 as bad debt and receive the rest of its AR

6.

ABC sold the equipment Aug 30" for $10,000

7.

Customer 333 ordered 10,000 pair of socks at $6/pair with GST but did not pay anything in 2019.

5,000 pairs were shipped to the customer in 2019.

Note: Event in question 1 happened first. Record question 1 as you have no idea when will (Q2) happen

Prepare all Journal Entires, Balance Sheet, Income Statement and Cash Flow Statement for 2019