Year 1 Transactions for Adomain Transaction 2 3 5 6 7 8 9 10 10 11 12 13 14 15 16 17 18 19 20 Date January 1 March 31 April April April April May 1 May 1 June 10 July 31 July 31 Sept 30 October 1 October October 1 Dec 1 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Event Paid last year's income tax liability Sold inventory on account for $157.500(a) The cost of the inventory was 517,200 (b). Also, paid a sales commission on this sale of 512,600 Prepaid $28,200 for insurance for the next 12 months and recorded the transaction as an asset Paid $25,500 in cash foremuiment (PP&E) Purchased Inventory for $26,000. Paid $6.500 in cash and recorded an Accounts Payable for the remaining balance Received 550,000 in cash related to the receivable recorded on March 31 Paid off accounts payable related to the purchase of inventory on April Received $42.000 in cash in advance for services. The services will be provided over the cone of 6 months beginning on Oct 1 of this year Paid $30,000 in cash for expenses related to new products: $15.700 for research and development of the products (a) od S14,300 for marketing to advertise them. (b) Purchased supplies for $14,000 in cash. The accountant accidently debited Accounts Receivable instead of the appropriate account The accountant recorded an adjustment to correct the entry made in 10 so that the accounts will reflect what should have been recorded) Purchased marketable securities for $11,000 in cash Borrowed 50.000 from a local bank and signed a 5-year note payable promising to pay 6% interest per year interest is due and recorded on Dec 31) Paid $24.400 in cash to buy a plot of land for use as a parking lot Issued Common Stock worth $21.000 for cash Salaries of general officers were $21,000. The company paid $9,000 now and the remainder will be paid on Jan 1. Year 2 Income Tax for Year is $11.600 59.000 is paid this year and the remainder will be paid on Aprill of Year 2 Record the appropriate adjusting entry related to uneared revenue from May 1 (Transaction ) Record the appropriate adjusting entry related to the rent described in transaction 5.800 of supplies are still on hand on Dec 31 Record the appropriate adjusting entry to reflect the supplies left on hund. Refer to transaction 10) Record the appropriate adjusting entry related to the note payable described in transaction 12 (assuming interest will be paid us year 2) B Adomain Income Statement for Year ended December 31, Year 0 Revenues $190,500 Sales Revenue Expenses Cost of Goods Sold R & D Expense Sales Commissions Marketing Expense 1 Insurance Expense 2 Other Operating Expenses 3 Income from Operations 4. Interest Income 5 Income before Taxes 6 Income Tax Expense 7 Net Income 8 9 0 1 -2 3 4 5 (110,500) (10,000) (2,000) (5,000) (6,000) (27,500) $29,500 500 30,000 (9,500) 20,500
