ABC Incorporated began operations on Jan 1st, 2012with an initial issuance of 10,000 shares,( each with par value$0.10), for $5 per share
- On Jan 1st, 2012, the company purchased a two-yearfire insurance policy worth $10,000 and had paid it with cash.
- Company purchased equipment worth $100,000 on Jan1st by signing a one-year Notes Payable. Interest rateon the loan was 8% and the interest and the entire principal willbe paid on Jan 1st 2013. The depreciation on equipmentfor the year 2012 was $20,000
- On February 1st, 2012 the company entered into acontract to provide consulting services. It received an advance of$120,000. The company performs 5% of the work for which it wascontracted, every month.
- On November 15th, 2012, the company bought a pieceof land for $200,000 by taking a 30-year mortgage loan.
- On Dec 1st, the company makes a mortgage payment$2,000 which was composed of $1,500 principal payment and $500interest expense.
- In 2012, the company purchased (in cash) and used up officesupplies worth $20,000.
- Company purchased Investments worth $20,000 on Apr1st 2012. The company receives 10% interest on itsInvestments annually on June 30th
- On Feb 15th, 2012, the company bought toys inventoryworth $90,000 on credit from its suppliers.
- On March 20th, 2012, the company sold toys for$180,000. The company received 50% cash and the rest remained onaccount. The cost of these toys sold was $40,000
- The company’s franchisees owe ABC’s $800 in royalties for salesthe franchisees made in the last week of December 2012.
- Utilities expenses for the year 2012 were $10,000 and were paidin cash.
- Wages accrued in the last week of 2012 were $2,000 and will bepaid in the first week of 2013.
- On December 15th, 2012, the company declared cashdividends of $20,000 which will be paid sometime in 2013.
Prepare the journal entries (both regular and adjusting), trialbalance, Income Statement, Statement of Retained Earnings andBalance Sheet for the year ending December 31st 2012.Also create a T-Account for Cash.
