Question

3. On March 1, 2019 - An investor purchased 100 shares of stock (100%) from ABC Co. for $1.500,000 cash. The par value of the stock was $1/share. ABC Company purchased equipment for $90,000; paying $40,000 and financing (through a long-term note) the remaining portion. The note charges 12% (APR) interest. ABC had the following transactions after 3/1/2019: Sold and delivered services for $820,000. $460,000 cash was received immediately and the remaining amounts will be received in 2020. ABC was given in cash $60,000 for future services. The services are to be provided to the client in 2020. ABC paid $50,000 for advertising. The advertising was already displayed and incurred. ABC paid $100,000 for supplies. Cash was paid for both. Paid salaries in total of $200,000 for work already done. ABC received a $20,000 bill for utilities it had used in 2019. The bill will be paid in 2020. The amount of depreciation that needs to be recorded for the equipment (related to above) is $9,000. The new person counted supplies and determined that only $20,000 of supplies remained at year-end. ABC declared and paid a dividend of $20,000. The tax rate is 20% but the tax will not be paid until 2020. Prepare JEs, a balance sheet and Income Statement in good form for the year-ended 2019 for ABC Co. Round all non-round values to the nearest dollar.

Answer 1

ter's to the designing ABC Co Income statement as on 2019 ending, (9) Ant Aurt & Supplies - Sales! → Cash! - 4600.00 Credit:- 360000 Cash. OCCO 8 20000 (nross Profit. 740woo closing stk. 20000 840000 80.000 5000 Gross Profit 77000 Inst. (socce x 12 x 10 Advetisment Salaries Ols. Exp. Deph. Soooo 200000 2000 9000 (456000 ) Net profit. (traf to Retain. eam 740000 740000 Note? - we are Assuming that there were no opening stock of diviend is paid from Retaired coming

refers to the & designing ABC Co. Balance sheet for Year ending 2019 Amt Amt. Particulars. I Equity & Liabilities Shareholders find Euty Shay (100 x 1 100 Reserved surplus. i Sec. Premium (100 x 14g9g) 1499900 sil Retained earning 436000 191936000 ii) Non-Coment liabilities ú, Long-term Note 50000 50000 111) Corrent liabilities i Unearned Income Ok Exp GOOMO 20000 Rocco 2066 000 II Assets. i Non-Comet Assets. equipment Il Deph. 90000 (900) 10cu ii) Comet Assets. SHE debtor's 2.000 20000 360000 16ooo Cath. 1995100 2066000

refers to the @ ABC Loo Balonce sheet os on 31 Dec 2010 A Ant Particulars I Equity & Liability I shareholder's fond • Reserve & surply. " Additional Paid In Capital u Refaired eaming (WNI) City ii) Non-Cornet liability, ji Note payable 190 230 Hill Cement liability, i Ureamed Revenue II 500 Assets j Non-ciment Assets. u Equipruit (120-20) 100 200 W Comet Assets w Cash : (ii) Account Retendole úii) Supplies civo Prepaid Joserance 400 soo

200000 20000 WNI Retaired eaming (op.) = $100 (t) Net Income o dividend = ($20) [$230