Prepare a schedule of cost of goods sold, an income statement, a statement of changes in stockholder’s equity, a balance sheet and a statement of cash flows for 2013.

Instructions

 

Question 1: Recording events in the general journal, posting it to T-accounts, and preparing trial balance

The following events apply to Computer Services Inc. in the first year of operation:

Acquired $100,000 cash from the issue of common s tock

Performed services and received cash $50,000.

Incurred cas operating expenses $15,200.

Received an advance $20,000 for services to be provided in future

Reocgnized $450 of accrued interest revenue.

Paid $2,400 cash for salary expense.

Purchased $1,600 of supplies on account

Recognized $10,000 of revenue for services provided in event 4.

Recorded $1,600 of accrued salary expense

Provided services on account $20,000

Paid $2,000 cash dividend to shareholders.

A physical examination of end of the year showed that only $200 worth supplies remaining in the company.

Question 2: Final Accounts – Merchandizing Business

The following trial balance pertains to Feazell Hardware as of January 1, 2013.

Account Title Debit Credit
Cash $ 28,000
Account Receivable 18,000
Merchandise Inventory 120,000
Accounts Payable $ 10,000
Common Stock 140,000
Retained Earnings 16,000

The following events occurred in 2013. Assume that Feazell Hardware uses the periodic inventory system.

Purchased land for $16,000 cash

Purchased merchandise on account for $46,000, terms 2/10 n/30.

The merchandise purchased by Feazell was shipped FOB shipping point for $460 cash.

Returned $4,000 of defective merchandise purchased in Event 2

Sold merchandise for $40,000 cash

Sold merchandise on account for $100,000, terms 1/20 n/30.

Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.

Paid $2,400 cash for selling expenses.

Collected $70,000 of accounts receivable within the discount period.

Collected $30,000 of accounts receivable but not within the discount period.

Paid $6,400 of other operating expenses.

Performed a physical count indicating that $30,000 of inventory was on hand at the end of the accounting period.

Requirements

Record these transactions in a general journal.

Post the transactions to ledger T-accounts.

Prepare a schedule of cost of goods sold, an income statement, a statement of changes in stockholder’s equity, a balance sheet and a statement of cash flows for 2013.

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