Question

Required Information ABC Corporation was formed at the beginning of last year. The balances on its post-closing trial balance prepared on December 31, at the end of its first year of operations, were as follows: Cash $21. Bee 10. eee 200 10,5ee 1,200 25,880 2,400 Accounts Receivable Allowance for Doubtful Accounts Inventory Prepaid Rent Equipment Accumulated Depreciation Accounts Payable Salaries and Wages Payable Deferred Revenue Interest Payable Note Payable (long-term) Common Stock Additional Paid-In Capital, Common Retained Earnings 2,5ee 4,800 300 20, eee 12, 18, eee 8,300 The following Information is relevant to the first month of operations in the following year: • ABC sells its Inventory at $200 per unit. ABC's January 1 Inventory balance consists of 140 units at a total cost of $10,500. ABC's policy is to use the FIFO method, recorded using a perpetual Inventory system. • The $1,200 In Prepaid Rent on the December 31st Post-Closing Trial balance is a prepayment of January's rent. • The equipment was purchased on July 1 of last year. It has a residual value of $1,000 and an expected life of five years. It is being depreciated using the straight-line method. • Employee wages are $5,000 per month. Ignore payroll taxes and deductions. • Deferred Revenue is for 20 units of Inventory that were ordered and paid for in advance by two customers in late December. One order of 15 units is to be filled in January, and the other will be filled in February. • Notes Payable arises from a three-year, 6 percent bank loan received on October 1 last year. • The par value on the common stock is $2 per share.

Answer 1

Date	General Journal	Debit	Credit
1-Jan	Salaries & Wage Payable	$        2,500
	Cash		$       2,500
2-Jan	Equipment	$      10,000
	Cash		$     10,000
4-Jan	Dividend	$        3,000
	Dividend Payable		$       3,000
	6,000 CS @ 0.5/CS
5-Jan	Allowance for Doubtful Accounts	$          105
	Account Receivable		$         105
6-Jan	Account Receivable	$      20,000
	Sales Revenue		$     20,000
6-Jan	Cost of Goods Sold	$        7,500
	Inventory		$       7,500
9-Jan	Cash	$        9,500
	Account Receivable		$       9,500
10-Jan	Dividend Payable	$        3,000
	Cash		$       3,000
11-Jan	Inventory	$        4,875
	Account Payable		$       4,875
15-Jan	Depreciation Expense	$          200
	Acc. Depreciation		$         200
15-Jan	Cash	$      20,000
	Acc. Depreciation	$        2,600
	Loss on Sale	$        2,400
	Equipment		$     25,000
15-Jan	Salaries & Wage Expense	$        2,500
	Salaries & Wage Payable		$       2,500
16-Jan	Salaries & Wage Payable	$        2,500
	Cash		$       2,500
18-Jan	Interest Expense	$            60
	Interest Payable		$           60
18-Jan	Notes Payable	$      20,000
	Interest Payable	$          360
	Cash		$     20,360
27-Jan	Account Receivable	$        9,000
	Sales Revenue		$       9,000
27-Jan	Cost of Goods Sold	$        3,325
	Inventory		$       3,325
	To record Cogs 40 units @$75, 5 units @ 65/unit
29-Jan	Deferred Revenue	$        3,000
	Sales Revenue		$       3,000
29-Jan	Cost of Goods Sold	$        1,125
	Inventory		$       1,125
30-Jan	Cash	$      90,000
	Bonds Payable		$     90,000
Adjusting Entries:
31-Jan	Dep. Expense	$          420
	Acc. Depreciation		$         420
31-Jan	Bad Debt Expense	$          640
	Allowance for Doubtful Account		$         640
31-Jan	Rent Expense	$        1,200
	Prepaid Rent		$       1,200
31-Jan	Salaries & Wage Expense	$        2,500
	Salaries & Wage Payable		$       2,500

Cash
Date	Debit	Credit	Balance
1-Jan			$       21,000
1-Jan		$     2,500	$       18,500
1-Jan		$    10,000	$         8,500
9-Jan	$     9,500		$       18,000
10-Jan		$     3,000	$       15,000
15-Jan	$   20,000		$       35,000
16-Jan		$     2,500	$       32,500
18-Jan		$    20,360	$       12,140
30-Jan	$   90,000		$     102,140
Account Receivable
Date	Debit	Credit	Balance
1-Jan			$       10,000
5-Jan		105	$         9,895
6-Jan	20000		$       29,895
9-Jan		9500	$       20,395
29-Jan	9000		$       29,395
Allowance for Doubtful Accounts
Date	Debit	Credit	Balance
1-Jan			200
05-Jan	105		95
Inventory
Date	Debit	Credit	Balance
1-Jan			10500
6-Jan		7500	3000
11-Jan	4875		7875
27-Jan		3325	4550
29-Jan		1125	3425
Prepaid Rent
Date	Debit	Credit	Balance
1-Jan			1200
Equipment
1-Jan			25000
2-Jan	10000		35000
15-Jan		25000	10000
Acc. Depreciation
01-Jan			2400
15-Jan		200	2600
15-Jan	2600		0
Interest Payable
01-Jan			300
18-Jan		60	60
18-Jan	360		0
Salaries & Wage Payable
01-Jan			2500
01-Jan	2500		0
15-Jan		2500	2500
16-Jan	2500		0
Deferred Revenue
01-Jan			4000
29-Jan	3000		1000
Notes Payable- LT
01-Jan			20000
18-Jan	20000		0
Common Stock
01-Jan			12,000
Add. Paid in Capital
01-Jan			18,000
Retained Earnings
01-Jan			8,300
Dividend
01/Jan			0
04-Jan	3,000		3,000
Dividend Payable
04-Jan		3,000	3,000
10-Jan	3,000		0
Sales Revenue
06-Jan		20,000	20,000
27-Jan		9,000	29,000
29-Jan		3,000	32,000
Cost of Goods Sold
06-Jan	7,500		7,500
27-Jan	3,325		10,825
29-Jan	1,125		11,950
Account Payable
01-Jan			0
11-Jan		4,875	4,875
Dep. Exp
01-			0
15-Jan	200		200
Salaries & Wage Exp
01-Jan			0
15-Jan	2500		2500
Interest Expense
01-Jan	60		60
Bonds Payable
30-Jan		90,000	90,000
Loss on Equipment
18-Jan	2400		2400

ABC Corporation
Trial Balance
Accounts Tittle	Unadjusted		Adjustment		Adjusted
	Dr.	Cr.	Dr.	Cr.	Dr.	Cr
Cash	102140				102140
Accounts Receivable	29395				29395
Allow. for Doubtful Acc.		95		640		735
Inventory	3425				3425
Prepaid Rent	1200			1200	0	0
Equipment	10000				10000
Acc. Dep.-Equipment		200		420		620
Salaries and Wage Payable				2500		2500
Deferred Revenue		1000				1000
Notes Payable- LT
Common Stock		12000				12000
Add. Paid in Capital, C.S		18000				18000
Retained Earnings		8300				8300
Dividend	3000				3000
Account Payable		4875				4875
Bonds Payable		90,000				90000
Sales Revenue		32,000				32000
COGS	11950				11950
Salaries & Wage Exp	2500		2500		5000
Depreciation Exp	200		420		620
Interest Exp	60				60
Bad Debts			640		640
Rent Exp.			1200		1200
Loss 0n sale of Equ.	2400				2400