TAKE HOME QUIZ

ABC Incorporated began operations on Jan 1^st, 2012with an initial issuance of 10,000 shares,( each with par value$0.10), for $5 per share

1. On Jan 1^st, 2012, the company purchased a two-yearfire insurance policy worth $10,000 and had paid it with cash.
2. Company purchased equipment worth $100,000 on Jan1^st by signing a one-year Notes Payable. Interest rateon the loan was 8% and the interest and the entire principal willbe paid on Jan 1^st 2013. The depreciation on equipmentfor the year 2012 was $20,000
3. On February 1^st, 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.
4. On November 15^th, 2012, the company bought a pieceof land for $200,000 by taking a 30-year mortgage loan.
5. On Dec 1^st, the company makes a mortgage payment$2,000 which was composed of $1,500 principal payment and $500interest expense.
6. In 2012, the company purchased (in cash) and used up officesupplies worth $20,000.
7. Company purchased Investments worth $20,000 on Apr1^st 2012. The company receives 10% interest on itsInvestments annually on June 30^th
8. On Feb 15^th, 2012, the company bought toys inventoryworth $90,000 on credit from its suppliers.
9. On March 20^th, 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
10. The company’s franchisees owe ABC’s $800 in royalties for salesthe franchisees made in the last week of December 2012.
11. Utilities expenses for the year 2012 were $10,000 and were paidin cash.
12. Wages accrued in the last week of 2012 were $2,000 and will bepaid in the first week of 2013.
13. On December 15^th, 2012, the company declared cashdividends of $20,000 which will be paid sometime in 2013.

Required:

Prepare the journal entries (both regular and adjusting), trialbalance, Income Statement, Statement of Retained Earnings andBalance Sheet for the year ending December 31^st 2012.Also create a T-Account for Cash.