for year 2
Anything helps, just a little confused. Thank you!
Collect information that will enable you to determine the correct balances in all accounts at the end of Year 2. 1. Lexenthal Company (the firm) was formed on June 1, Year 1 when four people each invested $20,000 in the firm. One investor lent $12,000 to the firm that is to be repaid on June 1, Year 2 along with $1,200 of interest. 2. The firm leased an office space for one year on August 1, Year 1 and moved in that same day. The monthly rate was $8,000 and the rent for the entire year had to be paid on April 1, Year 2. 3. On August 1, Year 1, the firm rented some equipment for two years. The firm paid $1,800 at the time of signing the rental agreement. This amount covers the entire 24- month lease period. 4. On September 13, Year 1, the firm purchased some supplies on account for use in the business at a cost of $2,000. 5. On September 17, Year 1, the firm returned 30% of the supplies it had purchased because they were defective. 6. On September 1, Year 1, the firm hired six employees at a monthly salary of $3,000 each. These employees started working for the firm immediately. These employees are to be paid at the middle of each month for the period ending on that day. Their first payday will be on September 15, Year 1 and covers the first half of September. 7. On September 30, Year 1, the firm paid the amount owed for the supplies it had purchased earlier. 8. On November 1, Year 1, the firm completed its first consulting project for a client. The project was valued at $600,000 and the client paid 70% immediately and promised to pay the remainder on March 31, Year 2. Leventhal promised not to charge interest on the unpaid amount. 9. The paydays for September through December happened as scheduled. No employees were fired nor were any more employees hired. Refer to item 6 above. ! Supplies on hand at the end of Year 1 were $400 by actual count. On the next page, you will find proper balances in the balance sheet and the income statement: Leventhal Company Balance Sheet December 31, Yeart 5445.800 1.425 Assets Cash Prepaid Equipment Rental Accounts Receivable Supplies Inventory Total Assets 180.000 400 S627.625 540.000 9.000 700 Liabilities and Owners' Equity Rent Payable Salaries Payable Iniest Payable Note Payable Contributed Capital Retained Earings Total Liab. & Owners' Equity 12.000 80.000 485.925 5627.625 Leventhal Company Income Statement For the Seven Mont Ended December 31, Year 1 Revenu es 5600,000 Expenses Salaries Rent Supplies Interest Equipment Rental Total Expenses $72,000 40.000 1,000 700 375 114.OTS Income In Year 2 the following events occurred. 1. On January 16, Year 2, the firm granted a salary increase to the six employees. The new salary is $3,400 per month. 2. On March 31, Year 2, the firm collected the amount that was owed from the client for the project described in item 8 from Year 1. 3. The firm obtained a very large client. The firm provided $900,000 in services for this client through the remainder of Year 2. 120% of this amount had been paid to Leventhal through the end of Year 2. 4. The firm paid its employees the proper amounts on each of the paydays in Year 2. 5. The firm bought supplies on account at a cost of $8,500. 6. On June 1, Year 2, the firm repaid the investor that had lent it $12,000 plus the interest that was due [refer to item 1 in Year 1). 7. On April 1, Year 2, the firm paid the appropriate amount for the office it moved into on August 1, Year 1. The firm also renegotiated a new lease on this office space at a new monthly rental amount of $9,000. The new lease and the new rate would both become effective on August 1, Year 2 upon the expiration of the first year's lease. The new lease rental payment is to be paid on the first day of each month starting August 1, Year 2. 8. In December Year 2, Leventhal declared a cash dividend of $50,000 and paid cash dividends of $40,000. 3 Supplies on hand at the end of Year 2 by actual count were $700. Required: Place the proper balances for the correct account titles in the balance sheet at the end of Year 2 and the income statement for Year 2: Collect information that will enable you to determine the correct balances in all accounts at the end of Year 2. 1. Lexenthal Company (the firm) was formed on June 1, Year 1 when four people each invested $20,000 in the firm. One investor lent $12,000 to the firm that is to be repaid on June 1, Year 2 along with $1,200 of interest. 2. The firm leased an office space for one year on August 1, Year 1 and moved in that same day. The monthly rate was $8,000 and the rent for the entire year had to be paid on April 1, Year 2. 3. On August 1, Year 1, the firm rented some equipment for two years. The firm paid $1,800 at the time of signing the rental agreement. This amount covers the entire 24- month lease period. 4. On September 13, Year 1, the firm purchased some supplies on account for use in the business at a cost of $2,000. 5. On September 17, Year 1, the firm returned 30% of the supplies it had purchased because they were defective. 6. On September 1, Year 1, the firm hired six employees at a monthly salary of $3,000 each. These employees started working for the firm immediately. These employees are to be paid at the middle of each month for the period ending on that day. Their first payday will be on September 15, Year 1 and covers the first half of September. 7. On September 30, Year 1, the firm paid the amount owed for the supplies it had purchased earlier. 8. On November 1, Year 1, the firm completed its first consulting project for a client. The project was valued at $600,000 and the client paid 70% immediately and promised to pay the remainder on March 31, Year 2. Leventhal promised not to charge interest on the unpaid amount. 9. The paydays for September through December happened as scheduled. No employees were fired nor were any more employees hired. Refer to item 6 above. ! Supplies on hand at the end of Year 1 were $400 by actual count. On the next page, you will find proper balances in the balance sheet and the income statement: Leventhal Company Balance Sheet December 31, Yeart 5445.800 1.425 Assets Cash Prepaid Equipment Rental Accounts Receivable Supplies Inventory Total Assets 180.000 400 S627.625 540.000 9.000 700 Liabilities and Owners' Equity Rent Payable Salaries Payable Iniest Payable Note Payable Contributed Capital Retained Earings Total Liab. & Owners' Equity 12.000 80.000 485.925 5627.625 Leventhal Company Income Statement For the Seven Mont Ended December 31, Year 1 Revenu es 5600,000 Expenses Salaries Rent Supplies Interest Equipment Rental Total Expenses $72,000 40.000 1,000 700 375 114.OTS Income In Year 2 the following events occurred. 1. On January 16, Year 2, the firm granted a salary increase to the six employees. The new salary is $3,400 per month. 2. On March 31, Year 2, the firm collected the amount that was owed from the client for the project described in item 8 from Year 1. 3. The firm obtained a very large client. The firm provided $900,000 in services for this client through the remainder of Year 2. 120% of this amount had been paid to Leventhal through the end of Year 2. 4. The firm paid its employees the proper amounts on each of the paydays in Year 2. 5. The firm bought supplies on account at a cost of $8,500. 6. On June 1, Year 2, the firm repaid the investor that had lent it $12,000 plus the interest that was due [refer to item 1 in Year 1). 7. On April 1, Year 2, the firm paid the appropriate amount for the office it moved into on August 1, Year 1. The firm also renegotiated a new lease on this office space at a new monthly rental amount of $9,000. The new lease and the new rate would both become effective on August 1, Year 2 upon the expiration of the first year's lease. The new lease rental payment is to be paid on the first day of each month starting August 1, Year 2. 8. In December Year 2, Leventhal declared a cash dividend of $50,000 and paid cash dividends of $40,000. 3 Supplies on hand at the end of Year 2 by actual count were $700. Required: Place the proper balances for the correct account titles in the balance sheet at the end of Year 2 and the income statement for Year 2
