Question

Use the following information to record transactions, and prepare financial statements On Jan 1, 2018, TIM, Inc. started as a business entity. A summary of transactions through Dec. 31, 2018 is presented below. 1. Stockholders invested $50,000 in cash in the business. 2. New computer equipment is purchased for $6,000 in cash on January 1. Equipment will be used for 3 years. 3. Office rent for half a year is paid in advance, $8,000. 4. Dividends of $500 paid to existing shareholders. 5. Paid $10,000 to employees for services provided. 6. Paid utility bills, $2000. 7. Provided (and completed) design services on account to customers, $30,000. 8. Collected cash of $2,000 for services billed in 7). Required: a) Prepare a tabular analysis of the transactions by using the Balance Sheet Equation (A=L+ E) through December 31, 2018. Be sure to label your transactions. b) Journalize the transactions c) Prepare the balance sheet as of December 31, 2018. From what part of the BSE table did you get the information to prepare the balance sheet? d) Prepare the income statement for the period from January 1, 2018 through December 31, 2018.

Answer 1

Page 50,000 S0.000 - JOURNAL ENTRY. y lash Alc. " To tapital. Ale (being lapital invested by Stalkoholden) L27 Computer . Ale - Do To loosh. ( being computer porc ago) 6,000 6,000.

ao As Rent Alc Do 24,000 To cash. 24,000 ( blug rent haid 8000 X 1.5 years) Prepaid Rent Alb-Do! 8.000 To sent Alc. 8,000 (Boing flooo belongs Nest your advaneo) -Note Assuming rent as advance for Next year) e Dividend Alc 500 To Share holder. (being cividend dedeared Shareholder Alo - Do To coach. Soo being Oludend Dandy SOC SOO

10,000 157 dolany DLC To cash . Ale (boing calare paid to employs for their serwies 267 o Expense Alc - Dr. To cash. ( being utility Billy paid). 2000 2.000. 30.000 30,000 167Trade Receivablog Alle Do To boleslawined. ( bang.. design services provided and competed) 1187 lash Alo - To Brade receivables (beling baxt Myment mind Caganet Gewichprovided 2.000 2000. 2000 2,000 {9} Debredoton Alc-DO To computer Ale. | bolug opreciation changed for the

lash Ale To tapital 50.000 by computer To Trade by Rent . Heivobles. 2.000 by, Dudond by bills by dblany. by bal old 6000 24,000 S00. 2,000 10,000 9.500. 52.000

Page Balance licet Equation Transaction. Asset. L'ability 4 Capital tap 50,000 cash + Lomputery +Prob . + Delitos i Povestment in buined Rent by Stocksholdes 50.000 2 New Computer bought. (6000) + 6,000 3 Advance sent. (2000) Hobo 8000 Tux Dividend paid. (500) (500) (10,000) (10000) 5) Solavy hayment. b> Utility Bills (Exhemes. (2000) (2,000) A Jewle provide 30,000 Sopo KBX Cash received agovnost 2,000 ( 2000) such sowice 25500+ 6.000 48000 + 28,00 67,500 67,500 67.500. Total • Debtor also called as Trade receivables

Balance Sheet as on slo Deo 2018. 1) Equity & liability {il Share Capital. Lex Reserve & duoplus 50,000 (soo). 49,500 Total 12 Asset 40oo. At Non current asset. (1) Propeuty plant Equipment, Computer Ber Current asset Trade Receivables, coother current asset. (Prepaid rent) Cash & Cash 09) 28,000. 8000. 9.SOD Total 49,500

Theome statement for the 2 Dec 2016 Reunue foom operation Other Pneome Total Revenue 50.000, Loss- Kemployee beatit lost 10,000 (Salary Depreciation 2000. other Expense Utility Bill 2,000 Rent 16000 Alvided 500 18,500 Totol Exb 30.500 Profit loss) for the year (500)