Anonymous
Anonymous asked in Business & FinanceOther - Business & Finance · 9 years ago

accounting transactions!! please help?

Given the following transactions for ABC Company for 2010:

1) The owners started the business as a corporation by contributing $50,000 cash

2) ABC purchased office equipment for $5,000 cash and land for $15,000 cash

3) ABC earned a total of $32,000 of revenue, of which $20,000 was collected in cash

4) ABC purchased $550 worth of supplies for cash

5) ABC paid $6,000 in cash for other operating expense

6) At the end of the year, ABC owed employees $3,600 for work that the employees had done in 2010. The next payday, however, is not until January 4, 2011

7) Only $120 worth of supplies was left at the end of the year.

Office equipment was purchased on January 1 and is expected to last for 5 years (straight-line amortization, no salvage value)

Required: Prepare the income statement for the year ended December 31, 2010, and the balance sheet at December 31, 2010.

Can you show me your calculations? thank you!

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  • 9 years ago
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    I'm assuming accrual accounting, correct?

    Income Statement

    Revenue - 32,000 >> given

    Cost of goods sold - (430) >> $550 supplies (inventory?) - $120 left at end

    -------------------------------------------

    Gross profit - 31,570 >> $32,000 revenue - $430 COGS

    Operating expense - (6,000) >> given

    Depreciation expense - (1,000) >> $5,000 basis / 5 years = $1,000 year depreciation

    Salaries expense - (3,600)

    -------------------------------------------

    Net income - 20,970 >> $31,570 gross profit - $6,000 - $1,000 - $3,600

    Balance Sheet

    ASSETS

    Cash - 43,450 >> (see below)

    Accounts receivable - 12,000 >> $32,000 revenue - $20,000 collected

    Supplies/Inventory - 120 >> given

    Office equipment - 5,000 >> given

    Accumulated depreciation - (1,000) >> sum of all years' depreciation, which is only this year's so far.

    Land - 15,000 >> remember, land is not depreciated

    -----------------------------------------------

    Total Assets - 74,570

    LIABILITIES & EQUITY

    Salaries payable - 3,600 >> only accrued, not yet paid

    -----------------------------------------------

    Total Liabilities - 3,600

    Paid in capital - 50,000 >> given

    Retained earnings - 20,970 >> see net income on income statement

    ----------------------------------------------

    Total Equity - 70,970

    Total Liabilities and Equity - 74,570

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Assets = $74,570

    Liabilities & equity = $74,570

    They match so we did everything correctly.

    Now here's how I got the cash balance:

    Cash: 50,000 contribution + 20,000 (cash received in revenue) - 5,000 (paid for equip.) - 15,000 (paid for land) - 550 (paid for supplies) - 6,000 (paid for other expenses) = $43,450

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Kinda sloppy, but you should be able to make out how everything was done.

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