INSTRUCTIONS:

a. Prepare journal entries for these transactions.

b. Establish T-accounts for each account, and post the journal entries to these T-accounts.

c. Prepare an income statement, statement of shareholders equity, a December 31, 2020, balance sheet, and statement of cash flows for 2020.

(a, b, and on item c, only income statement and balance sheet)

P4.3 (LO 3) Ryan Hope, controller of Hope Inc., provides you with the following information concerning Hope during 2020. (Hope Inc. began operations on January 1, 2020.)

1. Issued 1,000 shares of common stock at $95 per share.

2. Paid $2,600 per month to rent office and warehouse space for 2020. The rent was paid on the last day of each month of 2020.

3. Made total sales for services of $190,000: $65,000 for cash and $125,000 on account.

4. Purchased property for $32,000 in cash.

5. Borrowed $75,000 in cash on December 31. The note payable matures in two years.

6. Payroll totaling $80,000 were incurred and paid during the year.

7. Miscellaneous expenses totaling $40,000 were incurred and paid during the year.

8. $56,000 was received from customers as payment on account.

9. Declared and paid a dividend of $26,000.