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AP 3 - 1 2 A ( Journalizing , posting, and preparing trial balance and closing entries ) Hughes Tools Company started business on October
APA Journalizing posting, and preparing trial balance and closing entries Hughes Tools Company started business on October Its fiscal year runs through to September the following year. The following transactions occurred in the fiscal year that started on October and ended on September
On October Jill Hughes invested $ to start the business. Hughes is the only owner. She was issued common shares.
On October Hughes Tools borrowed $ from a venture capitalist a lender who specializes in startup companies
On October the company rented a building. The rental agreement was a twoyear contract requiring quarterly rental payments every three months of $ payable in advance. The first payment was made on October covering the period from October to December Thereafter, payments were due on December March June and September for each threemonth period that followed. All the rental payments were made as specified in the agreement.
On October the company purchased equipment costing $ for cash.
Initial inventory was purchased for $ cash.
Additional purchases of inventory during the year totalled $ all on account.
Sales during the year totalled $ of which $ was on account.
Collections from customers on account totalled $
Payments to suppliers on account totalled $
The cost of the inventory that was sold during the year was $
Selling and administrative expenses totalled $ for the year. Of this amount, $ was unpaid at year end.
Interest on the loan from the venture capitalist was paid at year end September The interest rate on the loan is In addition, $ of the loan principal was repaid at that time.
The equipment was depreciated based on an estimated useful life of years and a residual value of $
The company declared and paid a dividend of $
Required
a Prepare journal entries for each of the transactions and adjustments listed in the problem.
b Prepare the necessary accounts and post the journal entries to them.
c Prepare an adjusted trial balance.
d Prepare the closing entries and post them to the accounts.
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