Journalize and post closing entries. (4 pts)
Prepare an income statement in proper format for the calendar month ended January 31, 2018. (4 pts)
Prepare a Statement of Retained Earnings for the calendar month ended January 31, 2018. ( 3 pts.)
Prepare a balance sheet in proper format as of the calendar month ended January 31, 2018. (6 pts)
ABC Company On December 2017, A group of five friends decided to open ABC Company, which dealt with providing renewable energy solutions and consultancy services to houses and commercial buildings among some. The following are the transactions that occurred during their first month of operations: Place the credit transaction/s (maybe one or more) of the following debit transactions. (2 points each) 1. On January 1, 2018, their business was formally established through the issuance of 10,000 shares of stocks with a par value of P300, and was bought for P5,000,000. The five friends equally divided the shares among themselves. Debit Cash 5,000,000 2. They found a suitable space to house their headquarters in Makati City. The property had a floor area of 500 sqm. After some negotiations, the group and the space owner settled on a rental fee of P200,000 per month of rental payable on the 1st day of the month to which the rental would apply. The group decided to sign a two-year lease contract, which called for them to issue a check of P800,000 to pay for the rent of the first four months (January, February March April). Debit Prepaid Rent 800,000 3. On January 5, several units of equipment, furniture, and fixtures were purchased and delivered. The total for these purchases amounted to a whopping P1,500,000, which were all paid in cash. From research, the five friends pegged the life of the equipment, furniture, and fixtures they bought to be 10 years, with an estimated resale value of P100,000 at the end of its useful life. Debit Equipment, Furniture and Fixtures 1,500,000 4. As well, P25,000 worth of supplies were purchased, in cash, on January 5. Debit Supplies 25,000 5. On January 15, Helios completed work on three small-scale (each billable for less than P20,000) consulting projects. The clients, Marino Associates, Baes Home Builders, and Romero Inc., were billed P8,000, P10,000, and P12,000, respectively. An n/EOM payment plan was agreed on for each. Debit Accounts Receivables 30,000 6. In order to raise the company's liquidity, the owners decided to enter in to a loan contract with the bank for a 8%, 10-year bank loan amounting to P2,000,000. The company received the loaned amount on January 18, 2018. Debit Cash 2,000,000 7. On January 20, they provided consulting services to Clean Energy, Inc. and billed the client P400,000 for the services rendered. The invoice came with payment terms, 5/10, n/30. Receivables 8. Some clients became really interested with the company and on January 21, the company received P1,500,000 from Helping Hands International for a 2-year contract to create renewable energy solution for a remote village in the Mountain Province. Debit Cash 1,500,000 Adjusting Entries 9. January 25, the company collected the entire receivable from the January 20 transaction. Debit Cash 380,000 Debit Sales Discount 20,000 10. Part of the company's prepaid rent has expired and should be charged as expenses for the month. Depreciation of equipment, furniture and fixtures should be accounted for. The company decided to use the double declining balance method. Depreciation per month is determined by dividing the total depreciation projected for the year by 12 months. Debit Rent Expense 200,000 Debit Depreciation Expense 25,000 11. An inventory count of the amount of supplies is made at the end of January. The count shows that P15,500 of supplies are on hand. Debit Supplies Expense 9,500 12. It was noted that Marino Associates and Romero Inc. had paid their invoice in full by January 31. Baes Home Builders had paid only 50% of its obligation, and Helios decided to directly write-off its unpaid balance. Debit Cash 25.000 Debit Bad Debt expense 5,000
