Required:

1.Prepare journal entries for the 18 transactions.

2.Prepare a trial balance showing what the ending ledger balances would be after the 18 transactions.

3.Prepare an income statement for the year.

4.Prepare a statement of stockholders equity for the year

5.Prepare a balance sheet at the end of the year 2016.

Best Company

January 1, 2016,

Balance Sheet

Cash 20,000

Accounts receivable 110,000

Less: Allowance for doubtful accounts (10,000)

Inventory (500 units @ $20 each) 10,000

Equipment 9,000

Less: Accumulated depreciation ( 2,000)

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Total assets 137,000

Accounts payable 20,000

Long-term notes payable (5% interest, due in 2019) 100,000

Capital stock 10,000

Retained earnings 7,000

-------------------

137,000

Transactions or events:

The company collected 98,000 of the accounts receivable in cash.

The company wrote off one $1,000 accounts receivable from J. Jones

On Jan. 1, the company bought a car for $30,000.

The company paid 19,000 of its accounts payable in cash.

The company bought 900 units of inventory for $21 each in cash.

The company bought a 1 year insurance policy for $2400 on October 1.

The company paid rent for the months January through December of $18,000

On July 1, the company bought rights to a patent for $20,000. The patent has ten more years of useful life.

On Dec 31, the company paid rent for Jan. 2017 for $1,500.

On Dec. 1, the company bought another 200 units of inventory for $22 on account.

On Dec. 15, the company sold 1,300 units for $30 each. 1000 were sold for cash, and 300 on account.[The company accounts for its inventory on the FIFO basis, so the first items bought are assumed to be the first ones sold.]

The company decided to record bad debt expense of $1,000.

The company recorded depreciation on the equipment. The equipment is one year old. It had a cost of $9,000, salvage value of $1,000, and an expected useful life of 4 years.