Question
Transactions Jan. 1 The company issued 100,000 shares of $10 par value common stock to LJ Porter in exchange for $910,000 in cash and equipment
| Transactions | |
| Jan. 1 | The company issued 100,000 shares of $10 par value common stock to LJ Porter in exchange for $910,000 in cash and equipment valued at $330,000. |
| Jan. 1 | The company prepaid $108,000 in cash for a 24 month insurance policy. |
| Feb. 1 | The company borrowed $130,000 on a 3-year, 6% installment note payable. The terms of the note require the company to make equal payments of $48,634 each December 31 for 3 years. |
| Mar. 1 | The company provided engine repair services to a customer and received $325,000 in cash. |
| Jul. 1 | The company issued 2% 5-year bonds with par value of $400,000. The bonds were issued at 97%. Interest payments are due twice each year on June 30 and December 31. |
| Dec. 31 | The company paid the first interest payment on the bonds issued on July 1. |
| Dec. 31 | The company paid $48,634 for its annual installment on the installment note from above. The company must calculate and record both the principal portion and the interest portion for this payment. |
| Dec. 31 | The company declared a $100,000 dividend that is to be paid in cash on February 10 of the next year. The date of record is January 20. Note: The company records dividends in a dividend account which is closed at the end of the year with all other temporary accounts. |
| Adjustments needed: | |
| Dec. 31 | The company must record a full year of depreciation on the equipment. The equipment has an estimated useful life of 5 years and no salvage value. The company depreciates equipment on a straight-line basis. |
| Dec. 31 | The company must record an adjustment for 12 months of insurance expense. |
REQUIRED:
| A) | Prepare the general journal entries to record a set of transactions. |
| B) | Update the appropriate accounts according to your entries. You may use T-accounts, calculations, etc. You may attach separate sheets to show your work, if needed. |
| C) | Prepare an adjusted trial balance as of December 31. All adjusting entries should be included in the adjusted trial balance. |
| D) | Prepare an income statement for the 12 months ended December 31. |
| E) | Prepare a statement of retained earnings for the 12 months ended December 31. |
| F) | Prepare a balance sheet as of December 31. |
| G) | Prepare closing entries for the period ended December 31. |
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