Constructed Response Items

ABC Mobile Phones Inc. purchases mobile smartphones from various suppliers and sells them to commercial outlets. The following is ABCs unadjusted trial balance as of 31 December 2013.

(all amounts in US Dollars)

Dr.

Cr.

Cash

613,254

Accounts Receivable

16,200

Inventory

62,000

Fixed Assets

118,000

Accumulated Depreciation, Fixed Assets

32,400

Accounts Payable

17,000

Retained Earnings/Equity

552,922

Sales

784,655

Cost of Goods Sold

285,123

Salaries Expense

255,000

Rent Expense

24,200

General & Administrative Expenses

13,000

TOTAL

1,386,777

1,386,977

Prepare any necessary adjusting journal entries using the following information:

a. ABC sold 50 mobile phone units on credit at $200 each. The cost of each unit is $50.

b. Customers ordered and paid for 100 units at a sales price of $250 each and a cost of $60 each. The units are to be delivered in February 2014.

c. ABCs office lease expired on 31 March 2013. All amounts related to the expired lease have been entered. A new two-year lease was signed as of 1 April 2013. A full payment of $240,000 was made in advance on 1 April 2013 to fully satisfy the terms of the lease.

d. One of ABCs customers is unhappy with its recent delivery and has informed ABC management that she is intending to file a lawsuit against ABC for $50,000

Using the Unadjusted Trial Balance and Adjusting Journal Entries prepared, prepare the following two statements for ABC Mobile Phones Inc. for year end 2013: