The following transactions for calendar year 2021 occurred for ABC Company. ABC uses periodic method for inventory. Income tax rate is 25%.

1. Prepare T-Accounts or journal entries to record the transactions.
2. Record all required year end entries and Compute Net Income.
3. Prepare a classified Balance Sheet as of 12/31/2021.
4. Prepare a multi-step Income Statement for 2021.
5. Prepare a statement of Cash Flows for 2021. Use either the direct or indirect method.

1. Opening balances were as follow: Cash-$70,000, Accounts Receivable-$80,000, Inventory-$30,000, Property, Plant & Equipment-$50 000, Accumulated Depreciation-$300,000, Accounts Payable-$40,000, Common Stock-$90,000, Retained Earnings $250,000.
2. Signed a lease for their office building. Lease term is for one year starting on 4/1/2021.
3. Paid $ 20,000 for the office building lease in Item 2 on May 1, 2021.
4. Issued a purchase order to a vendor for $115,000 of inventory.
5. Purchased equipment for $300,000 paid $200,000 down and signed a, 8% note for the balance.

Equipment was acquired on 10/1/2021. One payment of principal for $50,000 and accrued interest is due on 9/30/2022. One payment of principal for $50,000 and accrued interest is due on 9/30/2023.

1. Purchased $825,000 of inventory on account.
2. Made Sales on account of $1,200,000 and cash sales of $300,000 for the year. Cost of Sales was $800,000.
3. Paid General expense salaries of $190,000, Restructuring costs of $30,000, and Selling expenses of $45,000.
4. Paid $750,000 for the inventory purchased in Item 6.
5. Depreciation expense on equipment was $35,000 for 2021.
6. Salaries earned in 2021 but not paid until 2022 amounts to $8000
7. Purchased a short-term equity investment for $40,000 on November 1, 2021.
8. Paid Dividends of $80,000 on December 1, 2021.
9. Paid $100,000 to purchase a business component. The purchase is recorded as goodwill. No amortization is required to be recorded.
10. Sold the business component purchased in 12 for $70,000. The component had sales of $50,000 cost of sales of $30,000 and Salaries of $10,000. These amounts are included in 7 & 8 above.
11. Collected $1,140,000 on the sales made in Item 7.