Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On October 1 An investor purchased 1 0 0 shares of stock ( 1 0 0 % ) of ABC Co . for $ 3

On October 1 An investor purchased 100 shares of stock (100%) of ABC Co. for $3,500,000. The 3,500,000 was paid directly to ABC in exchange for ABC common stock. ABC Company purchased equipment for $180,000; paying $30,000 cash and financing (through a long-term note) the remaining portion. The interest rate is 5%, payable on January 1st of each year. ABC Company prepaid a years (12months) worth of insurance and rent. Insurance payment was $48,000 and the rent was $72,000.
ABC had the following transactions after 10/1:
ABC purchased the following inventory on credit: 10/110,000 units at $20/unit.11/15,000 units at $30/unit 12/15,000 units at $25/unit.
ABC sold 18,000 units on account for $40/unit. Terms are 3/10, N45. ABC uses LIFO. ABC received $360,000 in cash within 5 days of the sales; and received the remaining amounts after year-end.
ABC was given $30,000 in cash for inventory that will be delivered after year-end (delivered next year).
ABC paid $25,000 for advertising. ABC paid $20,000 for miscellaneous supplies. Cash was paid for both.
Paid $80,000 in cash for salaries for the year. The end of the year was in the middle of the week and the total unpaid salary expense for the year was $5,000. This $5,000 will not be paid until first week of next year.
Sold services for $50,000 in cash. We had to return $10,000 back to customer as a return and allowance due to unsatisfactory work of our soon-to-be-fired employee.
At year-end the amount of supplies on-hand was $3,000. The equipment was depreciated by $20,000 by year-end. We paid $400,000 of our accounts payable balance by year-end. We estimate 1% of credit trade-sales to be uncollectible. The tax rate is 40%. Round all numbers to the nearest dollar.
ABC declared and paid a dividend of $30,000.
Prepare a Balance Sheet and Income Statement in good form for the year-ended 12/31/2015. Also provide closing entries.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Anne Britton, Chris Waterston

4th Edition

0273703609, 978-0273703600

More Books

Students also viewed these Accounting questions

Question

What access controls does Ruby support for instance variables?

Answered: 1 week ago

Question

To what extent is news constructed or created?

Answered: 1 week ago