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Question 5 (30 marks) ABC Company (a bookstore) experienced the following transactions in 2017. For each transaction, enter the impact of the transaction on the
Question 5 (30 marks) ABC Company (a bookstore) experienced the following transactions in 2017. For each transaction, enter the impact of the transaction on the worksheets provided (one transaction per worksheet; all transactions are independent). ABC uses a perpetual inventory system. Choose line titles from the drop-down list in each cell. Some line titles may not be needed for any transaction. ABC has a fiscal year end of December 31, 2017. It prepares all adjusting entries on that day. Ref Transaction a) ABC Company recorded the use of office supplies for all of 2017 based on the following information. The unadjusted balance in Office Supplies was $500 at December 31, 2017. The unadjusted balance in Office Supplies Expense was $0 at December 31, 2017. A year-end count showed $100 of office supplies on hand. b) ABC's customers used gift cards to purchase $300 of books. The books cost ABC $100. c) ABC recorded depreciation for 2017 based on the following information. ABC purchased delivery equipment at the beginning of 2017 for $12,000. The estimated useful life of the equipment is 4 years, with a residual value of $2,000. ABC uses straight-line depreciation. d) ABC recorded the required adjusting entry based on the following information. On September 1, 2017, ABC paid $2,400 for a one-year insurance policy (Prepaid insurance was debited at the time), with coverage beginning September 1, 2017 e) ABC recorded the required adjusting entry based on the following information. Wages earned by employees during December 2017, unpaid and unrecorded at December 31, 2017, amounted to $1,200. The last paycheques were issued December 29, the next payments will be made on January 6, 2018. F) ABC recorded the required adjusting entry based on the following information. ABC borrowed $10,000 on July 1, 2017. The annual interest rate is 6%. The interest and loan must be repaid in full on June 30, 2018. ) ABC recorded income tax expense for 2017 based on the following information. Total income before tax for 2017 was $10,000. The company's income tax rate is 30 percent. No entry has been made yet for income tax expense. h) ABC declared and paid dividends of $1,000
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