FA2 Project

1. Martin Company had the following transactions during its first month of operations:

June 1 The company received cash of $35,000 and issued common stock to the shareholders.

2 Borrowed $20,000 from the bank and signed a long-term note payable.

8 Purchased equipment with a short-term note payable for $10,000.

9 Performed services billed at $3,000 and received cash of $3,000.

10 Performed services for a client on account, $6,500.

12 Employees worked two weeks and were paid salaries of $1,000.

15 Paid the short-term note payable from the June 8 purchase.

22 Purchased office supplies on account for $7,000.

30 Paid amount due for office supplies.

30 Paid June's monthly rent of $500.

30 Paid the monthly income taxes of $2,200.

30 The Board of Directors declared and paid dividends of $1,000.

Required:

1. Journalize the entries. Omit the explanations.

2. Prepare a single-step income statement for the first month of operations. Include a proper heading.

3. Prepare a statement of retained earnings for the first month of operations. Include a proper heading.

4. Prepare the balance sheet with proper heading.

5. Prepare closing entries.

2. The Schauer Company had the following adjustments at December 31, 2019, the end of the accounting period:

A. The Schauer Company uses straight-line depreciation for its equipment. The cost of the equipment is $105,000 and the useful life is 5 years. The equipment was purchased on January 1, 2019 and has no residual value.

B. Accrued interest of $10,000 on a note receivable will be received in January.

C. On November 1, 2019, the Schauer Company paid $3,000 for six months of rent in advance. The rental period is November 1, 2019 through April 30, 2020.

D. On August 1, 2019, the company collected $24,000 in advance for a consulting contract, which is to be earned evenly over the next 24 months.

E. Employees are owed salaries for 3 days of a 5-day workweek; weekly payroll is $30,000.

F. The unadjusted balance of the supplies account is $2,750. Based on a physical count, the cost of supplies on hand is $1,000.

G. The company has incurred interest expense of $1,000 that will be paid in January.

Required:

1. Journalize the adjusting entries. Explanations are not required.