Adomain Income Statement for Year ended December 31, Year O Adomain Balance Sheet As of December 31, Year O $145,500 Assets (62.500) Cash carable Securities Revenues Sales Revenue Expenses Cost of Goods Sold R & D Expense Sales Commissions Marketing Expense Rent Expense Other Operating Expenses Income from Operations Interest Income Income before Taxes Income Tax Expense Net Income (9.10) Marketable Securities (3.000) Accounts Receivable (9,000) Inventory (5.700) PPSE (net) 6,500 20,000 25,000 34,700 10,500 15,000 $191,700 (23,000) $34.200 Intangible Assets 400 Other Long-Term Assets 34,600 Total Assets (8,500) 26,100 Liabilities & Equity Accounts Payable Notes Payable Unearned Revenue Income Tax Payable Common Stock Retained Earnings Total Liabilities & Equity $45,000 28,500 50,000 4,100 45,000 19,100 $191,700 Assume these notes represent non-interest-bearing loans from owners, due in 5 years. Year 1 Transactions for Adomain Transaction # 3 10a 10b 11 Date Event January 1 Paid $12,700 in cash for costs related to research and development of new products. March 15 Paid last year's income tax liability. April 1 Received $35,000 in cash in advance for services. The services will be provided over the course of 5 months beginning on Dec 1 of this year. Apnl i Prepaid $42,000 for rent for the next 12 months and recorded the transaction as an asset. April 1 Paid $25,000 in cash for long-term assets April 5 Purchased inventory for $19,000. Paid $2,000 in cash and recorded an Accounts Payable for the remaining $17,000. May 1 Purchased a patent for $28,500 in cash. May 1 Isold inventory on account for $115,000. The cost of the inventory was $26,000. Also, paid a sales commission on this sale of $8,000. June 30 Received the cash to settle $45,000 of the receivables recorded on May 1. July 31 Purchased supplies for $5,000 in cash. The accountant accidentally recorded the supplies in the Accounts Receivable account. July 31 The accountant recorded an adiustment to correct the entry made in 10a (so that the accounts will reflect what should have been recorded) Sept 30 Borrowed $15,000 from a local bank and signed a 3-year note payable promising to pay 10% interest per year (interest is due and recorded on Dec 31). October 1 Issued 1000 common shares to investors for $40,000 October 1 Received $30,000 in cash relating to the Accounts Receivable in transaction 8. October 31 Purchased marketable securities for $9,000 in cash. Dec 1 Employee salaries earned amounted to $21,000. The company paid $11,000 on Dec 1 and the remainder will be paid on Jan 1, Year 2. Dec 31 Income Tax for Year 1 is $4,500. $2,500 is paid this year and the remainder will be paid on March 15 of Year 2. Dec 31 Record the appropriate adjusting entry related to transaction 3. Dec 31 Record the appropriate adiusting entry related to transaction 4. Dec 31 $1000 of supplies are still on hand on Dec 31. Record the appropriate adjusting entry to reflect the supplies used during the year. (Refer to transaction 10.) Dec 31 Record the appropriate adjusting entry related to the note payable described in transaction 11 (assuming interest will be paid in Year 2). D E F G H I J K L M N O P R S T U T 13 14 15 17 18 19 20 B C Die Long Term FP5E Intangible from won Operations Account Pablo Notes Pablo Unearned Income W Pasible Common Related Income Sistement P Marketable Accounts CA Secure Pedra 80,000 112.7001 Libro 142.000 125 000 12,000 121,500 19000 17.000 121.000 12.00 IIIIIII Account labels IIIIIIIIIIIIII 1500l 15,000 20000 1200001 IIIIII 2500 99800 15,500 80000 8,000 34,200 15700 51700 50,500 1000 2000 0 2000 o 48,000 10800