Assignment 1

Below is the December 31, 2012 balance sheet for

XYZ

Corporation as well as a

narrative of transactions that occurred during 2013.

XYZ

Corporation

Balance Sheet

December 31, 2012

Assets

Current

Cash

1,000

Accounts

Receivable

3,000

Inventory

4,000

Total Current Assets

8,000

Property and Equipment (net of

accumulated depreciation)

20,000

Total Assets

28,000

Liabilities and Shareholder Equity

Current

Accounts Payable

5,000

Salary Payable

1,000

Total Current Liabilities

6,000

10% Note Payable

10,000

Total Liabilities

16,000

Common Stock

10,000

Retained Earnings

2,000

Liabilities and Shareholder Equity

28,000

Relevant Information for 2013

1.

Sales for the year were $70,000. All sales were on account (i.e., credit sales).

2. Collections of accounts receivable totaled $72,000 cash.

3. New property and equipment were purchased for $4,000 cash.

4. Equipment with a book value of $2,000 was sold for $1,800 in cash.

5. Depreciation was $2,000 for the year.

6. Purchases of inventory totaled $35,000 for the year. All purchases were on

account (on credit).

7. Payments to suppliers for purchases on account totaled $32,000 in cash.

8. The ending inventory balance was $5,000.

9. On December 31

, 2013, repaid the 10% note with accrued interest by

paying the bank $11,000 cash.

10. $20,000 in cash was paid during the year for salaries payable to employees.

(Hint: This amount includes payment of the $1,000 Salarie

s Payable balance from

12/31/2012.)

11. $500 salaries expense was ac

crued for the last 4 days of 201

3.

12. Cash payments for other expenses totaled $1,500.

13. On June 30, 201

3,

XYZ

paid $1,000 in cash for a one

-year insurance policy

covering the peri

od June 30, 2013 to June 30, 2014.

Requirements:

Record all transactions in journal entries. Prepare balance sheet and

income statement (once using the single step method and once using the multiple step

method) for the year ended December 31, 2013. Accounts listed on the balance sheet should be in correct order.