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QUIZ 2: WORKSHEET AND FINANCIAL STATEMENTS Entity A started operations on January 1, 20x1. A summary of the transactions during the year is provided below:
QUIZ 2: WORKSHEET AND FINANCIAL STATEMENTS
Entity A started operations on January 1, 20x1. A summary of the transactions during the year is provided below:
- The owner invested 2,000,000 to the business.
- Acquired equipment for 1,000,000 cash.
- Obtained a 12%, one-year, bank loan of 500,000.
- Paid one-year insurance amounting to 160,000 on September 30, 20x1. Entity A uses the "asset method" in recording prepayments.
- Total service fees earned amounted to 6,000,000, one-third of which was on cash basis.
- Collected 1,800,000 accounts receivable.
- Total salaries expense paid amounted to 1,200,000.
- Total utilities expense paid amounted 500,000.
- Total supplies purchased on cash basis amounted to 120,000.
- Total owner's drawings amounted to 1,400,000.
Requirements:
- Provide the journal entries for the transactions.
- Post the entries to the ledger using T-accounts.
- Prepare the unadjusted trial balance using a worksheet.
- Prepare the adjusting entries (see additional information below).
Information for adjusting entries:
- The equipment was acquired on January 1, 20x1 and was estimated to have a useful life of 10 years.
- The loan was obtained on July 1, 20x1. Principal and interest are due at maturity date.
- The one-year insurance covers the period October 1, 20x1 to September 30, 20x2.
- Unused supplies at the end of the year amounted to 40,000.
- Complete the worksheet.
- Prepare the closing entries.
- Prepare the balance sheet and income statement.
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