Order Income Statement And Journal Entries

Order Income Statement And Journal Entries
MBA 606
Problem Set
Worth 60 points due at the end of Week 2
Be sure to include a cover page for this assignment.
Part I – Booking Transactions using Journal Entries
The Topanga Company provides legal services to its customers. At the beginning of 2016, the company had the following balances in its financial accounting records:
DEBIT CREDIT
Order Income Statement And Journal Entries
Cash $16,200
Accounts Receivable $1,800
Building $4,800
Accumulated Depreciation – Building $2,800
Notes Payable $2,000
Common Stock $15,000
Retained Earnings $3,000
· Notes Payable represents money that won’t need to be paid back for a long time. The company pays interest (in cash) every December 31 at a rate of 9%.
· Building was purchased 28 years ago and is expected to last another 20 years (a total of 48 years)
Order Income Statement And Journal Entries
For each of the transactions below, write journal entries in a manner that makes it CLEAR which accounts are debited and which are credited. Failure to do this will be rewarded with NO credit.
Transaction 1: On April 1, the company pays 3 years of rent in advance with $7,200 cash.
Transaction 2: On April 11, the company buys $20,000 of Inventory and the supplier trusts them to eventually pay (credit Accounts Payable).
Transaction 3: On May 1, the company finds someone willing to buy $4,000 of Inventory for $14,000. The company delivers it immediately. The customer puts down $8,000 in Cash immediately AND is known to have excellent credit scores.
Transaction 4: On August 26, the company gets a Utilities bill for $3,000 and pays it immediately.
Transaction 5: On December 15, the company pays $2,000 (Cash) for some the Inventory it bought on April 11.
Transaction 6: On December 15, the company pays out a $1,000 cash dividend to its owners.
Part II – Booking Adjustments
Now, it is December 31, 2016. For each of the transactions below, write journal entries in a manner that makes it CLEAR which accounts are debited and which are credited. Failure to do this will be rewarded with NO credit.
· 9 months of the rent purchased on April 1 has been “used up”
· Deal with Annual Depreciation
· Deal with Annual Interest on the Note Payable
Part III – Preparing Financial Statements
Order Income Statement And Journal Entries
1. Prepare a well-formatted Income Statement for The Topanga Company for the year ended December 31, 2016.
The Topanga Company
Income Statement
For the Year Ended December 31, 2016
2. Prepare a well-formatted Balance Sheet for The Topanga Company as of December 31, 2016.
The Topanga Company
Balance Sheet
As of December 31, 2016