The Accounting Cycle Problem Set ABC Company Ltd. Assets Equities Land 1 000 Paid-in Capital 4 000 Machinery equipment 2 500 Retained Earnings 1 500 Office Store equipment 3 000 Tax payable 1 300 Raw materials Inventory 1 800 Loan Payable 3 000 Office Supplies Inventory 2 500 Salary payables 1 100 Accounts Receivable 2 000 Accounts payable 3 500 Cash, Bank 3 800 Unearned rent revenue 3 000 Prepaid expenses 2 000 Allowance for uncollectible accounts 1 200 Total assets 18 600 Total equities 18 600 Balance Sheet on Nov. 30, 2014 Summary of transactions during December: 1. Salaries to employees of 8750were calculated for December and will paid in January. 2. Purchase of 10050 of Office Supplies Inventory with 1% cash discount for cash transaction. 3. Purchase of raw materials Inventory of 2750 was done with three month trade credit. 4. Due to the low quality of the purchased office supplies inventory the company returned back 500 of inventory that diminished the accounts payable by that amount. 5. Paid outstanding salary payables. 6. Paid outstanding tax payables. 7. Paid outstanding trade creditors in the amount of 1700. 8. The freight in for both supplies and raw material inventory was paid in the amount of 1280. 9. Performed services for Customer XYZ, for which we will receive 21875 on 2 month credit sale. 10. At the end of month the Customer XYZ made a claim on the services and we agreed to sales allowance in the amount of 10%. 11. Performed consulting services, in the amount of 3 000 with 5% for cash discount on sales (cash immediately received). 12. Performed services, in the amount of 17500(cash immediately received). 13. In November 2014 we performed additional consulting work, 3 000 on credit (5/30, n 60) and in December 2014 the customer used the discount for prompt payment. 14. We sold office supplies inventory on the market for 2 000 through credit card transaction (a straight 1% of credit card services were taken). 15. The cost of raw materials inventory used during December is 1 200. 16. In the beginning of October 2014 a subscription rights for local newspaper magazine of 4 000 was paid for four month term in advance; 17. In the beginning of September 2014 company receives rent for 6 months in advance, 6,000 18. At the end of the month Company repaid to the Bank credit tranche 1 000 and paid interest charges (interest rate as of 6% p.a.) 19. Depreciation of machinery equipment for December amounts to 500. 20. ABC company acknowledged the 1 200 worth of bad debts in December 2014. Required: a) Prepare the opening journal entry on Dec. 1, 2014. b) Prepare the journal entries for the transactions (1 21) for the month of December and post them to the T-accounts, opening additional T-accounts for accounts as needed. Crossreference the entries using the numbers of the transactions above. c) Prepare a trial balance. d) Prepare the adjusting journal entries and record them at the end of December in the Taccounts as well as in the trial balance. e) Prepare the closing entries for the temporary accounts and the Income Statement. f) Prepare the closing entries for the permanent accounts and the Balance Sheet as of Dec. 31, 2014.