Question

Preparo Read pages 12-18 and read the article "What It Takes to Be Great". Remember this article is fair game for all tests and quizzes. Problem 2 You have decided to start a business selling widgets. You form a corporation, Widgets, Inc. You paid $10 per share for 1,000 shares of stock on January 1, 2020. Next the company borrowed $30,000 from your Aunt Suzie. For the $30,000 borrowed from your aunt, the company agrees pay back that amount on December 31, 2026 and to pay interest at 10% at the end of each year. On January 1, 2020, the company bought 6 widgets for $3,000 each. During the year, it sold 4 widgets for $8,000 each. The company also paid a security deposit of $1,000, advertising expense of $2,000, and 12 months of rent, $12,000. Widgets, Inc. bought a delivery van on December 31st that cost $20,000, putting $5,000 down on the van and agreeing to pay the balance next year. On December 31 the company paid the first year's interest to Aunt Suzie of $3,000. the tax rate is 30% of income before taxes and the taxes will be paid in 2021. Prepare T accounts, an income statement, statement of owners' equity and a balance sheet I was taught that the way of progress is neither swift nor eas Madame Marie Cur

can you please explaine the T table as well. thanks

Answer 1

Widgets Inc. Journal Enteries Trans. Particulars 1 Cash a/c To Common Stock (Common stock issued) Dr. Debit in $ Credit in $ 10000 10000 30000 Cash a/c Dr. To Note Payable (Cash borrowed form aunt) 30000 Trial Balance For the period ending 31.12.2020 Particulars Debit in $ Credit in $ Cash 31000 Inventory 18000 Security Deposit 1000 Delivery Van 20000 Accounts Payable 15000 Income Tax Payable 4500 Note Payable 30000 Common Stock 10000 Sales 32000 Advertising expense 2000 Rent Expense 12000 Interest Expense 3000 Income Tax Expense 4500 Totals 9150091500 18000 Inventory a/c Dr. To Cash (Widgets purchased) 6 x 3000 18000 4 Dr. 32000 Cash a/c To Sales (Widgets sold) 4 x 8000 32000 5 Dr. 1000 Security Deposit a/c To Cash (Security deposit paid) 1000 32000 Statement of Income For the period ending 31.12.2020 Sales Less: Advertising expense Rent Expense Interest Expense 6 2000 Advertising expense a/c Dr. To Cash (Advertising expense paid) 2000 2000 12000 3000 17000 15000 Dr. 12000 -4500 Rent Expense a/c To Cash (Rent paid) 12000 Less;Income Tax @ 30% Net Income 10500 8 20000 Delivery Van a/c Dr. To Cash To Accounts Payable (Delivery Van purchased) 5000 15000 Statement of Owner's Equity For the period ending 31.12.2020 Common Retained Stock Earnings Beginning Balance Add:Net Income 10000 10500 Ending Balance 10000 10500 0 9 Dr. 3000 Interest Expense a/c To Cash (Interest paid) 3000 4500 10 Income Tax Expense a/c Dr. To Income Tax Payable (Income Tax accrued) 4500

10000 Common Stock Note Payable Sales Bal. Common Stock Cash 10000 10000 10000 Cash 10000 Inventory 30000 Security Deposit 32000 Advertising expense Rent Expense Delivery Van Interest Expense Bal. 72000 18000 1000 2000 12000 5000 3000 31000 72000 32000 Sales Cash 32000 32000 Bal. 32000 Cash Cash Inventory 18000 Bal. 18000 Advertising expense 2000 Bal. 2000 18000 18000 2000 2000 Cash Cash Security Deposit 1000 Bal. 1000 Rent Expense 12000 Bal. 12000 1000 1000 12000 12000 Cash Cash Accounts Payable Delivery Van 5000 15000 Bal. 20000 Interest Expense 3000 Bal. 3000 20000 20000 3000 3000 Income Tax Expense 45001 15000 Income Tax Payable Bal. Accounts Payable Delivery Van 15000 15000 Bal. 4500 4500 15000 4500 4500 Income Tax Payable Income Tax Expense 4500 45001 Bal. 4500 Note Payable Cash 30000 30000 30000 Bal. 30000