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1) Throughout the year, the company purchased parts and supplies inventory totaling $75,000. Of the $75,000, $10,000 was cash paid at the time of purchase, and the remaining $65,000 was purchased on account.

2) Total sales of the year were $330,000. Of course, $110,000 were sales on account, $60,000 were cash sales, and $160,000 were credit card sales. The credit card company charged Alice's a 2% fee for each sale.

3) The original cost of the parts and supplies inventory used was $69,000.

4) Rent for the facility in which the company operated remained at $1,000 throughout the year. The company had paid for the first two months rent during December of the prior year. It paid for the remaining 10 months rent during the current year.

5) The cost of insurance for the year was $1,200, paid in cash.

6) The company included $5,000 in employees paychecks in January for work done in the prior year.

7) Alice decided to write off three accounts during the year because those customers were not likely to pay the combined $4,000 they owed to Alices.

8) During the year, employees, including Alice, earned $200,000 in salaries and wages, of which $194,000 was included in the paychecks to the employees during the year, and the remaining $6,000 would be included in their January paychecks the following year.

9) Remaining operating expenses totaled $10,000, all paid in cash.

10) On April 15, the company paid its prior years taxes of $2,258.

11) On October 1, the company made an interest payment of $3,000 to the local bank. The payment was related to the $25,000 loan to the company had obtained the prior October 1 that carried at 12% interest rate, with interest being payable annually on October 1.

12) In December, the company paid the rent for the following January in advance.

13) The total amount that customers owed Alices at the end of the year, after the three accounts had been written off, totaled $20,000.

14) Alices still owed suppliers $10,000 at the end of the second year for the inventory it had purchased.

15) In addition to his salary, the company paid a $10,000 dividend to Alice.

16) The companys tax rate was 15%. Alice planned to wait until April 15 of his companys third year to pay the income tax bill for its second year of operations.

17) The company still had the truck and equipment it had purchased at the beginning of its first year of operation. At the time, it had paid $30,000 for the truck and $20,000 for the equipment. It was assumed that the truck would have a useful life of five years, and the equipment would have a useful life of four years. Neither the truck, nor the equipment was expected to have any salvage value.

Required:

1) Prepare all journal entries required for Alices second year of operations.

2) Post the informations to T-accounts.

3) Prepare an income statement that summarizes the results of operations for the second year.

4) Prepare a balance sheet as of December 31.

5) Prepare a statement of cash flow for the second year.

Alices Electronics services, Inc.: The second year

Assets:

Cash $9000

Accounts receivables 22,000

Parts and supplies inventory 8,500

Prepaid rent 2000

Investment in XYZ, Inc. 55,000

PP&E 37,500

Total Assets $134,000

Liabilities

Accounts Payable $ 8,200

Wages Payable 5,000

Interest Payable 750

Loan Payable 25,000

Taxes Payable 2,258

Stockholders Equity

Capital Stock 80,000

Retained earnings 12,792

Total Liabilities and Stockholders Equity $134,000

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