Answered: Prepare the Income Statement for 2019…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 12PB: Prepare journal entries to record the following transactions that occurred in March: A. on first day...

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Question

The following Journal entries occurred in 2019
1. SAS invested 100,000 in cash in the business.
2. Purchased 3,000 of office supplies in cash.
3. Purchased equipment for 20,000, paying 15,000 in cash and the rest is on
account.
4. A customer purchased goods on account for 10,000
5. Withdrawals for personal expenses are 5,000
6. Paid 2,000 in cash for the current month's rent.
7. Paid 5,000 cash for insurance on the factory for 2 years.
8. Received a bill for 1,000 for advertising for the current year.
9. Paid $3,200 cash for office salaries and wages.
10. SAS withdrew $2,500 from the business for living expenses.
11. Received $3,000 from a client in payment on account for sales billed in
transaction 4.
12. Took a loan from XY Bank worth 20,000.
13. Purchased a truch for $15,000 cash.
14. Sold goods for 7,000 cash.
15. Received 8,000 in advance from a client for work to be done.
The following adjustments were found necessary at the end of the year:
1) The Truck depreciates using units of activity method. It has a useful life of 5
years, a salvage value of $3000 and estimated 400,000 km to travel. By the
end of the year the truck traveled 70,000 km.
2) Office supplies on hand are 1,200.
3) Interest on the loan is 18% annually and the loan was received November 1
st
.
4) Prepaid insurance was paid on April 1st
.
5) Unearned revenues that should be realized totaled 2,500.
6) Maintenance expenses that the accountant forgot to record totaled 3,000.
7) Sales revenues that aren't recorded totaled 1,500.
Required:
Prepare the Income Statement for 2019 and Balance Sheet for December 31, 2019