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You and your friends formed a consulting company, The Analysis Company (TAC) on January 1, 2020. Here are all the transactions that took place during
You and your friends formed a consulting company, The Analysis Company (TAC) on January 1, 2020. Here are all the transactions that took place during the year: January 1 TAC was formed on January 1, 2020 when you and your four friends each invested $30,000 in the firm. Additionally, one friend lent an additional $50,000 to the firm that is to be repaid on January 1, 2021, along with $3,000 of interest. January 1 TAC leased an office space for one year on January 1, 2020 and moved in that same day. The monthly rate was $2,000 and the rent for first three months were paid in cash on January 1, 2020. January 1 TAC hired an employee at a monthly salary of $5,000. The employee is to be paid in the middle of each month for the work provided during the period ending on that day. Their first payday will be on January 15, 2020. January 2 TAC purchased two computers by paying $5,000 in cash. The computers are supposed to last for five years with 200 salvage value. January 5 TAC purchased some supplies for use in the business at a cost of $3,000. This amount was charged to the firm's account (to be paid at a later date). January 5 TAC received $105,000 for a consulting project to be started in January 15. January 10 TAC returned 20% of the supplies purchased on January 5 because they were defective. January 16 TAC paid the amount owed for the supplies purchased on January 5. January 20 TAC completed its first consulting project for a client. The project was valued at $200,000 and the client paid 60% immediately and promised to pay the remainder on March 31, 2020. January 25 TAC declared and paid 10,000 in dividends to its shareholders. Additional information for end of period adjusting entries Assume TAC records adjusting entries once a month. Supplies on hand at January 31st were $400. Additionally, on January 31, TAC estimated that it had completed 40% of the project from January 5. Finally, during January TAC had performed services worth $20,000 that were not billed clients before January 31. Post the adjusting entries, construct an adjusted trial balance and finally, construct income statement, retained earnings statement and balance sheet
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