IMPORTANT: THE QUESTION IS THE LAST SENTENCE ON IMAGE 3
Accounting Cycle: [5328] Prepare the appropriate journal entries based on this information for Year 1 and collect information that will enable you to determine the correct balances in selected accounts at the ends of Year 1 and then Year 2. For the accounts indicated below, place your final account balances in the spaces as provided. 1. Orange Company [the firm) was formed on May 1, Year 1 when seven people each invested $1,000 in the firm. On that same date, one investor lent $5,000 to the firm that is to be repaid on May 1, Year 2 along with $300 of interest. 2. The firm leased an office space for one year on May 1, Year 1 and moved in that same day. The monthly rate was $500 and the rent for the entire year had to be paid on May 1, Year 2. 3. On June 1, Year 1, the firm rented some equipment for two years. The firm paid $480 at the time of signing the rental agreement. The contract calls for a second rental payment of $480 on June 1, Year 2. 4. On September 13, Year 1, the firm purchased some supplies for use in the business at a cost of $800. This amount was charged to the firm's account. 5. On September 14, Year 1, the firm returned 55% of the supplies it had purchased because they were defective. The correct amount was deducted from what Orange owed the supplier. 6. On May 15, Year 1, the firm hired five employees at a monthly salary of $200 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 June 15, Year 1. 7. On September 30, Year 1, the firm paid the amount owed for the supplies it had purchased earlier. 8. On October 1, Year 1, the firm completed its first consulting project for a client. The project was valued at $30,000 and the client paid 40% immediately and promised to pay the remainder on January 31, Year 2. Orange promised not to charge interest on the unpaid amount. 9. The paydays for June through December happened as scheduled. No employees were fired nor were any more employees hired. Refer to item 6 above. 10. On June 1, Year 1, the firm received $15,000 for a consulting project to be started in December Year 1. 11. During December Year 1, Orange completed $9,000 of the project discussed in the previous item. 12. Supplies on hand at the end of Year 1 were $100 by actual count. Required: Both of the financial statements for Year 1 are shown below. Accounting Cycle: [5328] Orange Company Balance Sheet At December 31, Year 1 Assets: Cash Accounts Receivable Prepaid Eq. Rent Supplies Total Assets $31,160 18,000 200 100 $49,460 Liabilities: Office Rent Payable Interest Payable Note Payable Salaries Payable Unearned Revenues Accounts Payable Total Liabilities $4,000 200 5,000 500 6,000 -0- $15,700 Owners' Equity: Contributed Capital Retained Earnings Total Owners' Equity $7,000 26,760 $33,760 Total Liabilities and OE $49,460 Orange Company Income Statement for the Eight Months Ended December 31, Year 1 Revenues $39,000 Expenses: Salaries $7,500 Office Rent 4,000 Equip. Rent 280 Supplies 260 Interest 200 Total Expenses: 12,240 Income $26,760 Accounting Cycle: (5328] In Year 2, the following events occurred. 1. On January 16, Year 2, the firm granted a salary increase to the five employees. The new salary is $250 per month. 2. The firm finished the remainder of the project described in items 10 and 11 from Year 1. 3. The firm collected the amount that was owed from the client for the project described in item 8 from Year 1. 4. The firm obtained a very large client. The firm provided $30,000 in services for this client through the remainder of Year 2. Of this amount 50% was still owed to Orange at the end of Year 2. 5. The firm paid its employees the proper amounts on each of the paydays in Year 2. 6. The firm bought supplies on account at a cost of $800. No payments to the supplier occurred in Year 2, 7. On May 1, Year 2, the firm repaid the investor that had lent it $5,000 plus the interest that was due. 8. On May 1, Year 2, the firm paid the appropriate amount for the office it moved into on May 1, Year 1. The firm also renegotiated the lease on this office space at a new monthly rental amount of $600. This is to be paid on the first day of each month starting May 1, Year 2. 9. On June 1, Year 2, the firm made its second payment of $480 for the rental of the equipment. 10. Supplies on hand at the end of Year 2 by actual count were $300. Required: Prepare proper balances in both financial statements at the end of Year 2 based on the activity as shown above for Year 2. Preview File Edit View Go Tools Window Help v Screen Shot 2021-... a Accounting Cycle: (5328] Prepare the appropriate journal entries based on this information for Year 1 and collect information that will enable you to determine the correct balances in selected accounts at the ends of Year 1 and then Year 2. For the accounts indicated below, place your final account balances in the spaces as provided. 1. Orange Company (the firm] was formed on May 1, Year 1 when seven people each invested $1,000 in the firm. On that same date, one investor lent $5,000 to the fimp that is to be repaid on May 1, Year 2 along with $300 of interest. 2. The firm leased an office space for one year on May 1, Year 1 and moved in that same day. The monthly rate was $500 and the rent for the entire year had to be paid on May 1, Year 2. 3. On June 1, Year 1, the firm rented some equipment for two years. The firm paid $480 at the time of signing the rental agreement. The contract calls for a second rental payment of $480 on June 1, Year 2. 4. On September 13, Year 1, the firm purchased some supplies for use in the business at a cost of $800. This amount was charged to the firm's account 5. On September 14, Year 1, the firm returned 55% of the supplies it had purchased because they were defective. The correct amount was deducted from what Orange owed the supplier. 6. On May 15, Year 1, the firm hired five employees at a monthly salary of $200 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 June 15, Year 1. 7. On September 30, Year 1, the firm paid the amount owed for the supplies it had purchased earlier. 8. On October 1, Year 1, the firm completed its first consulting project for a client. The project was valued at $30,000 and the client paid 40% immediately and promised to pay the remainder on January 31, Year 2. Orange promised not to charge interest on the unpaid amount 9. The paydays for June through December happened as scheduled. No employees were fired nor were any more employees hired. Refer to item 6 above. 10. On June 1, Year 1, the firm received $15,000 for a consulting project to be started in December Year 1. 11. During December Year 1, Orange completed $9,000 of the project discussed in the previous item. 12. Supplies on hand at the end of Year I were $100 by actual count. Required: Both of the financial statements for Year 1 are shown below. V Screen Shot 2021-... Accounting Cycle: [5328] Orange Company Balance Sheet At December 31, Year 1 Assets: Cash Accounts Receivable Prepaid Eq. Rent Supplies Total Assets $31,160 18,000 200 100 + $49,460 Liabilities: Office Rent Payable Interest Payable Note Payable Salaries Payable Uneamed Revenues Accounts Payable Total Liabilities $4,000 200 5,000 500 6,000 -0- $15,700 Owners' Equity: Contributed Capital Retained Earnings Total Owners' Equity Total Liabilities and OE $7,000 26,760 $33.760 $49,460 Orange Company Income Statement for the Eight Months Ended December 31, Year 1 Revenues $39,000 Expenses: Salaries $7,500 Office Rent 4,000 Equip. Rent 280 Supplies 260 Interest 200 Total Expenses: 12,240 Income $26,760 Accounting Cycle: (5328] In Year 2, the following events occurred. 1. On January 16, Year 2, the firm granted a salary increase to the five employees. The new salary is $250 per month 2. The firm finished the remainder of the project described in items 10 and 11 from Year 1. 3. The firm collected the amount that was owed from the client for the project described in item 8 from Year 1. 4. The firm obtained a very large client. The firm provided $30,000 in services for this client through the remainder of Year 2. Of this amount 50% was still owed to Orange at the end of Year 2. 5. The firm paid its employees the proper amounts on each of the paydays in Year 2. 6. The firm bought supplies on account at a cost of $800. No payments to the supplier occurred in Year 2, 7. On May 1, Year 2, the firm repaid the investor that had lent it $5,000 plus the interest that was due. 8. On May 1, Year 2, the firm paid the appropriate amount for the office it moved into on May 1, Year 1. The firm also renegotiated the lease on this office space at a new monthly rental amount of $600. This is to be paid on the first day of each month starting May 1, Year 2. 9. On June 1, Year 2, the firm made its second payment of $480 for the rental of the equipment 10. Supplies on hand at the end of Year 2 by actual count were $300. Required: Prepare proper balances in both financial statements at the end of Year 2 based on the activity as shown above for Year 2. Accounting Cycle: [5328] Prepare the appropriate journal entries based on this information for Year 1 and collect information that will enable you to determine the correct balances in selected accounts at the ends of Year 1 and then Year 2. For the accounts indicated below, place your final account balances in the spaces as provided. 1. Orange Company [the firm) was formed on May 1, Year 1 when seven people each invested $1,000 in the firm. On that same date, one investor lent $5,000 to the firm that is to be repaid on May 1, Year 2 along with $300 of interest. 2. The firm leased an office space for one year on May 1, Year 1 and moved in that same day. The monthly rate was $500 and the rent for the entire year had to be paid on May 1, Year 2. 3. On June 1, Year 1, the firm rented some equipment for two years. The firm paid $480 at the time of signing the rental agreement. The contract calls for a second rental payment of $480 on June 1, Year 2. 4. On September 13, Year 1, the firm purchased some supplies for use in the business at a cost of $800. This amount was charged to the firm's account. 5. On September 14, Year 1, the firm returned 55% of the supplies it had purchased because they were defective. The correct amount was deducted from what Orange owed the supplier. 6. On May 15, Year 1, the firm hired five employees at a monthly salary of $200 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 June 15, Year 1. 7. On September 30, Year 1, the firm paid the amount owed for the supplies it had purchased earlier. 8. On October 1, Year 1, the firm completed its first consulting project for a client. The project was valued at $30,000 and the client paid 40% immediately and promised to pay the remainder on January 31, Year 2. Orange promised not to charge interest on the unpaid amount. 9. The paydays for June through December happened as scheduled. No employees were fired nor were any more employees hired. Refer to item 6 above. 10. On June 1, Year 1, the firm received $15,000 for a consulting project to be started in December Year 1. 11. During December Year 1, Orange completed $9,000 of the project discussed in the previous item. 12. Supplies on hand at the end of Year 1 were $100 by actual count. Required: Both of the financial statements for Year 1 are shown below. Accounting Cycle: [5328] Orange Company Balance Sheet At December 31, Year 1 Assets: Cash Accounts Receivable Prepaid Eq. Rent Supplies Total Assets $31,160 18,000 200 100 $49,460 Liabilities: Office Rent Payable Interest Payable Note Payable Salaries Payable Unearned Revenues Accounts Payable Total Liabilities $4,000 200 5,000 500 6,000 -0- $15,700 Owners' Equity: Contributed Capital Retained Earnings Total Owners' Equity $7,000 26,760 $33,760 Total Liabilities and OE $49,460 Orange Company Income Statement for the Eight Months Ended December 31, Year 1 Revenues $39,000 Expenses: Salaries $7,500 Office Rent 4,000 Equip. Rent 280 Supplies 260 Interest 200 Total Expenses: 12,240 Income $26,760 Accounting Cycle: (5328] In Year 2, the following events occurred. 1. On January 16, Year 2, the firm granted a salary increase to the five employees. The new salary is $250 per month. 2. The firm finished the remainder of the project described in items 10 and 11 from Year 1. 3. The firm collected the amount that was owed from the client for the project described in item 8 from Year 1. 4. The firm obtained a very large client. The firm provided $30,000 in services for this client through the remainder of Year 2. Of this amount 50% was still owed to Orange at the end of Year 2. 5. The firm paid its employees the proper amounts on each of the paydays in Year 2. 6. The firm bought supplies on account at a cost of $800. No payments to the supplier occurred in Year 2, 7. On May 1, Year 2, the firm repaid the investor that had lent it $5,000 plus the interest that was due. 8. On May 1, Year 2, the firm paid the appropriate amount for the office it moved into on May 1, Year 1. The firm also renegotiated the lease on this office space at a new monthly rental amount of $600. This is to be paid on the first day of each month starting May 1, Year 2. 9. On June 1, Year 2, the firm made its second payment of $480 for the rental of the equipment. 10. Supplies on hand at the end of Year 2 by actual count were $300. Required: Prepare proper balances in both financial statements at the end of Year 2 based on the activity as shown above for Year 2. Preview File Edit View Go Tools Window Help v Screen Shot 2021-... a Accounting Cycle: (5328] Prepare the appropriate journal entries based on this information for Year 1 and collect information that will enable you to determine the correct balances in selected accounts at the ends of Year 1 and then Year 2. For the accounts indicated below, place your final account balances in the spaces as provided. 1. Orange Company (the firm] was formed on May 1, Year 1 when seven people each invested $1,000 in the firm. On that same date, one investor lent $5,000 to the fimp that is to be repaid on May 1, Year 2 along with $300 of interest. 2. The firm leased an office space for one year on May 1, Year 1 and moved in that same day. The monthly rate was $500 and the rent for the entire year had to be paid on May 1, Year 2. 3. On June 1, Year 1, the firm rented some equipment for two years. The firm paid $480 at the time of signing the rental agreement. The contract calls for a second rental payment of $480 on June 1, Year 2. 4. On September 13, Year 1, the firm purchased some supplies for use in the business at a cost of $800. This amount was charged to the firm's account 5. On September 14, Year 1, the firm returned 55% of the supplies it had purchased because they were defective. The correct amount was deducted from what Orange owed the supplier. 6. On May 15, Year 1, the firm hired five employees at a monthly salary of $200 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 June 15, Year 1. 7. On September 30, Year 1, the firm paid the amount owed for the supplies it had purchased earlier. 8. On October 1, Year 1, the firm completed its first consulting project for a client. The project was valued at $30,000 and the client paid 40% immediately and promised to pay the remainder on January 31, Year 2. Orange promised not to charge interest on the unpaid amount 9. The paydays for June through December happened as scheduled. No employees were fired nor were any more employees hired. Refer to item 6 above. 10. On June 1, Year 1, the firm received $15,000 for a consulting project to be started in December Year 1. 11. During December Year 1, Orange completed $9,000 of the project discussed in the previous item. 12. Supplies on hand at the end of Year I were $100 by actual count. Required: Both of the financial statements for Year 1 are shown below. V Screen Shot 2021-... Accounting Cycle: [5328] Orange Company Balance Sheet At December 31, Year 1 Assets: Cash Accounts Receivable Prepaid Eq. Rent Supplies Total Assets $31,160 18,000 200 100 + $49,460 Liabilities: Office Rent Payable Interest Payable Note Payable Salaries Payable Uneamed Revenues Accounts Payable Total Liabilities $4,000 200 5,000 500 6,000 -0- $15,700 Owners' Equity: Contributed Capital Retained Earnings Total Owners' Equity Total Liabilities and OE $7,000 26,760 $33.760 $49,460 Orange Company Income Statement for the Eight Months Ended December 31, Year 1 Revenues $39,000 Expenses: Salaries $7,500 Office Rent 4,000 Equip. Rent 280 Supplies 260 Interest 200 Total Expenses: 12,240 Income $26,760 Accounting Cycle: (5328] In Year 2, the following events occurred. 1. On January 16, Year 2, the firm granted a salary increase to the five employees. The new salary is $250 per month 2. The firm finished the remainder of the project described in items 10 and 11 from Year 1. 3. The firm collected the amount that was owed from the client for the project described in item 8 from Year 1. 4. The firm obtained a very large client. The firm provided $30,000 in services for this client through the remainder of Year 2. Of this amount 50% was still owed to Orange at the end of Year 2. 5. The firm paid its employees the proper amounts on each of the paydays in Year 2. 6. The firm bought supplies on account at a cost of $800. No payments to the supplier occurred in Year 2, 7. On May 1, Year 2, the firm repaid the investor that had lent it $5,000 plus the interest that was due. 8. On May 1, Year 2, the firm paid the appropriate amount for the office it moved into on May 1, Year 1. The firm also renegotiated the lease on this office space at a new monthly rental amount of $600. This is to be paid on the first day of each month starting May 1, Year 2. 9. On June 1, Year 2, the firm made its second payment of $480 for the rental of the equipment 10. Supplies on hand at the end of Year 2 by actual count were $300. Required: Prepare proper balances in both financial statements at the end of Year 2 based on the activity as shown above for Year 2
