accounting
Exercise III
Accounting Cycle
The Accounting Cycle – Problem Set ABC Company Ltd.
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Balance Sheet on Nov. 30, 2018 |
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Assets |
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Equities |
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Equipment |
5 000 |
Paid-in Capital |
4 000 |
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Office Supplies Inventory |
1 000 |
Retained Earnings |
3 600 |
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Accounts Receivable |
1 000 |
Tax payable |
1 000 |
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Cash, Bank |
6 600 |
Accounts payable |
5 000 |
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Total assets |
13 600 |
Total equities |
13 600 |
Summary of transactions during December:
1. Cash-Purchase of €1,000 of Office Supplies Inventory
2. At the end of the month Company took out a 9 % p.a., 90 day, €10,000 loan with the Bank
3. Performed consulting services, for which we received € 2,000 cash immediately.
4. Received an invoice for a series of advertisements, € 1 000, that appeared in the local news during December and will be paid in January.
5. Performed additional consulting work, € 1 800 on credit.
6. Performed advertisement services, for which we received € 1,000 cash immediately.
7. Paid salaries to employees of € 2,000 for December.
8. Paid outstanding tax € in the amount 800
9. Paid creditors € 1,300.
10. The cost of office supplies used during December is € 850.
11. Depreciation of equipment for December amounts to € 250.
Required:
a) Prepare the opening journal entry on Dec. 1, 2018.
b) Prepare the journal entries for the transactions (1. – 11.) for the month of December and post them to the T-accounts, opening additional T-accounts for accounts as needed. Cross-reference the entries using the numbers of the transactions above.
c) Prepare a trial balance.
d) Prepare the closing entries for the temporary accounts and the Income Statement.
e) Prepare the closing entries for the permanent accounts and the Balance Sheet as of Dec. 31, 2018.