Question

Record each of the following transactions in the horizontal model below. Then calculate the ending (12/31/17) balances. 1.      Sterling Cooper Advertising Agency began operations in 2017. They acquired $60,000 in cash in exchange of common stock. 2.      Performed advertising services, earning $30,000 on account and $10,000 in cash. 3.      Purchased supplies on credit $500. 4.      Paid operating expenses of $22,000. 5.      Borrowed $25,000 from the bank by signing bank note (promise to repay) 6.      Purchased land for $30,000 cash. 7.      Collected $24,000 cash from amounts previously recorded in Accounts Receivable. 8.      Supplies on hand at year end amounted to $200. Complete the horizontal analysis for 2017 and 2018 for each of the transactions presented.
Prepare the Income Statement, Statement of Changes in Stockholder's Equity, and the Balance Sheet for each year.

1.      Performed advertising services earning $35,000 cash and $7,000 on account.
2.      Paid operating expenses of $24,000.
3.      Received cash for advertising services yet to be performed, $5,000.
4.      On October 31th paid rent in advance for the next 6 months, $3,600.
5.      Paid $400 of A/P.
6.      Collected $10,000 in cash from amounts previously included in Accounts Receivable.
7.      At year end Sterling Cooper had earned $4,000 of the $5,000 received in transaction 3.
8.      Hint: Adjust the Prepaid Rent account

Answer 1