1. Show all Journal Entries and T-accounts used to complete the financial statements.

2013 Transactions:

1. 7/1/13: Al issues 8,000 shares of $2 par value Common Stock in return for $80,000 in cash.

2. 8/1/13: Al pays for an insurance policy that covers the period 2/1/14 7/31/14. Al pays the entire $4,200 amount in cash on 8/1/13.

3. 10/1/13: Al signs a contract to rent a building for 12 months at a rate of $1,200 per month. The contract begins on 3/1/14. Al makes an initial payment of $6,000 and will pay the remainder of the rental fees at the end of the contract (2/28/15).

4. 10/1/13: Al signs an employment agreement with Jane Smith. Ms. Smith will begin working on 1/1/14, earning $180,000 per year. She will be paid on the 15^th of each month for the prior months work (e.g., her first paycheck will be issued on February 15^th, as payment for Januarys services). [Assume all of these payments are made they will not be shown explicitly in this list of transactions.]

5. 11/1/13: Al buys (and receives) 4,800 cases of merchandise inventory for $252,000 on account.

6. 11/15/13: Al receives $45,000 in cash from a customer for goods to be delivered in February 2014.

2014 Transactions:

1. 1/1/14: Al buys $6,000 of office supplies on account.

2. 1/10/14: Al pays $18,000 cash to the supplier from the 11/1/13 transaction.

3. 1/15/14: Al signs a contract to rent a delivery van for $250/month. The rental period is 12 months and begins on 2/1/14. Payments for each month are made on the first of the month, starting on 2/1/14. [Assume all of these payments are made they will not be shown explicitly in this list of transactions.]

4. 4/1/14: Al returns $1,000 of office supplies to its supplier and pays the remainder of the balance of the 1/1/14 purchase in cash.

5. 5/1/14: Al buys a piece of land for $45,000. This amount includes $6,000 of legal fees to execute the contract. Al paid $45,000 in cash.

6. 6/1/14: The firm pays $3,000 in cash for advertising expenses, all of which relate to ads running in 2014.

7. 7/1/14: Al arranges to buy a corporate jet for $200,000 and will take delivery in June of 2015. No cash is exchanged.

8. 8/1/14: Al borrows $40,000 from the bank. This loan is in the form of a note that is due in two years (7/31/16) and bears interest at the rate of 6% per year. All of the interest and principal is due at the end of the note period.

9. 10/1/14: Al receives a $10,000 deposit from a customer for goods to be delivered in February 2015.

Other Information:

10. The firm delivers goods with a sales price of $375,000 to customers during 2014, as contracted. This amount includes the goods ordered on 11/15/2013. The remaining goods were sold on account. The firm collects $257,000 of these sales during 2014 and expects to fully collect the remaining amount.

11. At 12/31/14, the firm takes a physical inventory and finds the following items on hand:
    • $1,500 of the office supplies purchased on 1/1/14.
    • $162,000 of the inventory purchased on 11/1/13

12. On December 31, 2014, the Board of Directors will declare a dividend payable to shareholders equal to 40% of the firms Net Income for 2014. The dividend will be paid in 2015. If the firm has a Net Loss for the period, the Board of Directors will not declare a dividend.

13. The firm pays taxes at a 35% tax rate. If taxes are owed, they will be paid in January 2015. If the firm has a pre-tax loss, assume that there are no taxes paid nor tax refunds received. (In other words, if there is a pre-tax loss, assume a 0% tax rate.)