The company concluded a 12 month contract with customers for providing services, and required advance cash payment 60000$ for the whole contract amount. Customers fulfilled the requirement and paid the stated amount. Company received back the 60% of receivables, and paid out the payables' full amount. Purchased an equipment by the price 12000$, 60% was paid in cash. Obtained inventory by the price 40000$, and paid 40% in cash to suppliers. During the week 70%of inventory was realized with 50% markup. Customers paid 70% of the price in cash. The depreciation for the building per month was calculated as 500$, and for equipment 300$. Company accrued the following expenses: salaries 12000$, utilities 600$, profit tax 20%. At the end of the month company recognized the rent expenses (40%) and appropriate part of service revenue due to the contract.

Required:

a) Prepare journal entries (7 points)

b) Prepare Income statement from the results of transactions (5 points)

c) Prepare Balance sheet (5 points)

2. Which operations should you add to investing activity? Why?(2 points)

A L E Inventory $15 000,00 Trade payables $18 000,00 Capital $180 000,00 AR $30 000,00 Net profit $2 000,00 Prepaid insurance $12 000,00 Prepaid rent $3 000,00 Cash $120 000,00 Building $20 000,00 Total: $200 000,00 Total: $200 000,00