Oul School Exercise 1 Freeman Enterprises incorporated on December 2, 2012. The company engaged in following transactions during its first month of operations: Dec. Freeman and several others invested $500.000 cash in the business in exchange for 25,000 shares of capital stock 2 Dec. 3 Paid $2,000 office rent for the next five months Dec. 5 Received $150,000 advance payment for future services to be rendered Dec. Dec. 15 Billed clients $54,000 on account Dec. 19 Purchased a company car for $18,000. Paid $8,000 cash and issued a note payable for 9Purchased office equipment for $6,000 on account. the remaining amount owed. Dec. 21 Purchased office supplies for $700 cash. The supplies will last for several months Dec. 29 Dec. Paid December utilities of $400. Recorded and paid salary Received $40,000 from clients billed on December 15. expense of $15,000 31 Additional information: a. Of the amount received as advanced payment, only $10,000 has been earned. b. The car has a useful life of six years and is depreciated by the straight line method. The office equipment has a useful life of four years and it is depreciated with the straight line method as well. C. There is an interest rate of 9% on the note payable. d. The supplies consumed during December amount to $200. e. The monthly rent must be adjusted. f. Paid $1,500 to employees for extra hours worked in the last week of December. A partial list of the account titles used by the company includes (Complete the ones missing): Cash Capital Stock Vehicles Accounts Receivable Office Equipment Office Rent Expense Office Supplies Expense Office Supplies Client Revenue Notes Payable Utilities Expense Salary Expense Prepaid Rent ense Instructions a. Prepare journal entries, including explanations, for the above transactions. b. Prepare adjusting entries based on the additional information provided. c. Prepare an Income Statement and Statement of Retained Earnings. d. Prepare closing entries using a general journal. e. Prepare a Balance Sheet for the year 2012 www.euruni.edu