Assume cash transaction in year X1 unless otherwise noted.

1/1 An Investor acquired 100% of Crazys stock with an investment of $400,000 cash. Par value of stock was 10.00/share and a thousand shares were sold

Cash 400,000

Capital Stock 400,000

1/1 Crazy borrowed $250,000 cash by issuing a 3-year note with a stated interest rate of 10% per year. To be compounded annually. The interest will be paid on January 1 of each year (starting next year); and the principal will be paid on maturity

Cash 250,000

Notes Payable 250,000

1/3 Prepaid two years of rent for $24,000 (cash) for the current year. The first months rent was due 1/1 for January

Prepaid Rent 22,000

Rent Revenue 2,000

Cash 24,000

1/15 Purchased with cash - office equipment for $36,000 and supplies for $18,000

Office equipment 18,000

Cash 18,000

2/7 Received $150,000 cash for consulting, services to be performed in the future for client X

Cash 150,000

Unearned revenue 150,000

3/1 Started up a second line of consulting services. Sold and received $200,000 in total for the year in consulting services and paid related misc. expenses of $50,000. This summarizes all revenues and expense of business #2. All in cash.

7/1 Prepaid $24,000 cash for a 12-month insurance policy (starting on 7/1)

Prepaid insurance 24,000

Cash 24,000

8/1 Borrowed a $100,000 in cash from bank. Stated rate of interest is 10%. Principal and interest due 7/31/x2

9/12 Purchased $5,000 more of supplies on credit

Supply 5,000

Accounts Payable 5,000

9/16 Provided consulting services of $30,000 on credit to client Y from the main (first line) consulting service division.

10/1 Purchased $10,000 (with cash) of an investment in another companys (Pear Inc.) stock. Purchased $5,000 in bonds of Pear (not considered trading)

10/20 Collected $5,000 from client Y.

10/21 Delivered $150,000 for services delivered to Client ZA on account.

10/31 80% of the services for client X are performed.

12/1 Decided to sell second line of consulting business. Found a buyer for second line of consulting services. Sold the business in exchange for $40,000 worth of equipment; which resulted in a gain of $40,000 as the second line had no assets or liabilities.

12/15 Paid down the payable (supplies) with a $1,000 cash payment. We received $100,000 cash from Client ZA.

12/31 Counted supplies and determined that $5,000 of supplies were still on hand

12/31 Total salaries paid in year equaled $35,000. Remaining salaries are to be paid on 1/3/x2. The total amount of current year expense is $45,000. The amount unpaid related to this amount at year-end is $10,000.

Salary expense 35,000

12/31 Determined appropriate total depreciation is $10,000

Depreciation 10,000

Accumulated Depreciation Equipment 10,000

12/31 Determined that the stock purchased on 10/1 was now worth $16,000. However, the stock was not sold. Determined the bonds were worth 12,000.

12/31 We declared and paid a dividend of $10,000 to our investor

Dividend 10,000

Cash 10,000

12/31 We received cash of $2,000 in dividends from Pear Inc. We received $1,000 in interest from bonds.

Cash 3,000

Dividend 2,000

Interest from bond 1,000

Tax Rate is 21% (none of the tax is paid, but it is accrued as a liability)

1. Prepare Journal Entries and Adjusting Journal Entries (AJEs), and closing entries