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Entries for the year 2010

Date
7/1/2010

11/15/2010

7/1/2010

Particulars
Cash

Debit

Credit

($)

($)

20,000

Common Stock

10,000

Additional Paid-In Capital

10,000

Cash

40,000

Common Stock

10,000

Additional Paid-In Capital

30,000

SG&A

3200

Cash
2010(9/1-12/1)

Rent Expense

3200
8000

Cash
9/1/2010

Security Deposit

8000
4000

Cash
9/1/2010

Interest Receivable

4000
67

Interest Income
11/1/2010

Office Equipment

67
14800

Cash
12/31/2010

Depreciation Expense

14800
659

Accumulated Depreciation

2010

Office Supplies

659

1200

Account Payable
2010

Accounts Payable

1200
900

Cash
2010

SG&A

900
300

Office Supplies
2010

Cash
Revenue

300
132560
132560

2010

COGS

103500

Cash
7/1/2010

Prepaid Insurance

103500
2300

Cash
12/31/2010

Insurance Expense

2300
1150

Prepaid Insurance
2010

2010

Utility Expense

1150
1800

Cash

1600

Utility Payable

200

Advertising Expense

70000

Cash
7/1/2010

Cash

70000
30000

Notes Payable
12/31/2010

Interest Expense
Interest Payable

30000
1350
1350

Entries for the year 2011

Date

Particulars

Debit ($)

2011

Rent Expense
Cash

24000

Interest Receivable
Interest Income

203

Depreciation Expense
Accumulated Depreciation

3952

Office Supplies
Accounts Payable

600

Accounts Payable
Cash

700

SG&A
Office Supplies

700

Cash
Revenue
Unearned Revenue

1410000

Prepaid Expense
COGS
Cash

108168
911832

Insurance Expense
Prepaid Insurance

1150

3200

7/1/2011

Prepaid Insurance
Cash

1600

12/31/2011

Insurance Expense
Prepaid Insurance

200

1/2011

Utility Payable
Cash
Utility Expense
Cash
Utility Payable

3870

2011
2011
2011

2011

2011

2011

6/30/2011

2011

Credit ($)

24000

203
3952
600

700
700
1257650
152350

1020000

1150

3200

1600

200

3720
150

2011
12/15/2011

2011

6/30/2011

12/31/2011

Advertising Expense
Cash

150000

Dividends Declared
Dividends Payable

30000

Salary Expense
Cash

100000

Wage Expense
Cash
Wages Payable

70000

Notes Payable
Cash

10000

Interest Expense
Interest Payable
Cash

1350
1350

Interest Expense
Interest Payable

900

150000

30000

100000

64000
6000

10000

2700

900

Entries for the year 2012

Date

Particulars

Debit ($)

2012

Rent Expense
Cash

24000

2012
2012

2012

2012

1/2/2012

2012

2012

2012

2012

Interest Receivable
Income

Credit ($)

24000
Interest

214
214

Depreciation Expense
Accumulated Depreciation

3952

Office Supplies
Accounts Payable

1500

Accounts Payable
Cash

1400

SG&A
Office Supplies

1900

COGS
Prepaid Expense

108168

Unearned Revenue
Revenue

152350

COGS
Cash

1415500

Cash
(160*1800 subscription)
Unearned Revenue

288000

Cash
(2,304,500-288,000)
Unearned Revenue
(288,000*1/4)
Revenue

2016500

3952

1500

1400

1900
108168

152350

1415500

288000

72000
2088500

2012

320000
Advertising Expense
Cash

1/15/2012

320000

30000
Dividends Payable
Cash

11/1/2012
1/2012

2012

6/30/2012

12/31/2012

30000

Dividends
Cash

2000

Wages Payable
Cash

6000

Salary Expense
Cash

100000

Wage Expense
Cash (124000-6000)
Wages Payable

140000

Notes Payable
Cash

10000

Interest Expense
Interest Payable
Cash

900
900

Interest Expense
Interest Payable

450

2000
6000

100000

118000
22000
10000

1800
450

1. Depreciation for the 2010, 2011, and 2012 is calculated as follws:


For computer and software, depreciation per year = (9440-800)/3=2880
For other equipment, depreciation per year = (14800-9440)/5=1072
For 2010, depreciation=2880/6+1072/6 = 658.667
For 2011 and 2012, depreciation=2880+1072 = 3952
2. Interest on security is annually compounded hence the interest is calculated on the basis of
principal amount + last years interest.
3. Income tax is ignored.
4. All numbers have been rounded to the nearest dollar.
5. All the amounts are in USD.