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Year 1

1)Investors put $100,000 cash into ABC Company in exchange for common stock.

2)ABC Company bought supplies for $1,000 on account (AP)

3)On January 1, ABC purchased computers for $14,000. The computers were expected to have a 10 year life and a $2,000 salvage value.

4)ABC Company did consulting services for $30,000 on account (AR)

5)On September 1, ABC Company received $60,000 in advance for a6 month project.

6)On September 1, ABC loaned $10,000 to XYZ company with terms of 1 year and 9%.

7)On November 15, ABC received payment of $18,000 to satisfy outstanding AR.

8)Recorded salaries expense of $3,000.(assume we paid cash)

9)Recorded other expenses of $10,000 (combined rent, utilities etc)(assume we paid cash)

Adjustments needed:

a)Supplies of $300 remained on hand.

b)Address the unearned revenue received 9/1.

c)Accrue interest in notereceivable. Full payment will be received 9/30 next year.

d)Management estimates that $1,400 of the AR will eventually be uncollectible.

e)Record depreciation expense

f)Close the accounts (close rev/exp to RE)

Check figures: Total assets = $175,000, Net Income = $54,000 (Note: this means you will close all Rev/Exp accounts to zero and make Retained Earnings (RE) 54,000)

Year 2

1)ABC did a consulting job for $10,000 cash.

2)ABC did a consulting job for $25,000 on account (AR)

3)ABC purchased supplies for $1200.

4)On 7/1 learned that $800 would never be able to be collected and should be written off.

5)On 8/31received payment in full to satisfy Note Receivable (remember to accrue remaining interest and then record payment receipt separately; you have 2 lines to do it)

6)On 10/15 Received $400 of the $800 previously written off.(I recommend doing this in 2 separate entries/lines also)

7)On 12/31, the computers were sold for $12,000 (be sure to record depreciation for year 2 before you compute any gain or loss. You have 2 lines to do this.)

8)Recorded expenses of: salaries $3,000 and other $10,000.Paid cash, record together.

9)Received payment of $15,000 to satisfy outstanding AR.

Adjustments needed:

a)Supplies of $400 remained on hand

b)The remainder of the unearned revenue was earned during the year.

c)Management estimates that $2,100 of AR will eventually be uncollectible.

d)Prepare financial statements and close the accounts.

Income Statement FTYE 12/31/20X2 Balance Sheet AS of 12/31/20X2 Revenues Gain Less Expenses: Salaries & Other Bad Debt Expense Depreciation Expense Assets: Cash Supplies AR Less: ADA Total Assets $194,600 Net Income $39,600 Liabilities: AP SHE: CS Retained Earnings Statement of Changes in Stockholders' Equity FTYE 12/31/20X2 Total Liab and SHE Beginning C/S Ending C/S $100,000 $100,000 $54,000 Beginning Retained Earnings Plus Net Income Minus Dividends Ending Retained Earnings

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