1. Andrew is the president of ABC, Inc.

, a company that provides temporary employees for

not-for-profit companies. ABC has been operating for five years; its revenues are
increasing with each passing year. You have been hired to help Andrew analyze the
following transactions for the first two weeks of April:
a. Billed the local UW office $23,500 for temporary services provided.
b. Paid $3,005 for supplies purchased and recorded on account last period.
c. Purchased supplies for the office for $2,600 on account.
d. Purchased a new computer for the office costing $3,800 cash.
e. Placed an advertisement in the local paper for $1,400 cash.
f. Paid employee wages of $11,900. Of this amount, $3,800 had been earned by
employees and recorded
in the Wages Payable account in the prior period.
g. Issued 3,000 additional shares of common stock for cash at $45 per share in
anticipation of building a
new office. The common stock had a par value of $0.50 per share.
h. Received $12,500 on account from the local United Way office for the services
provided in (a).
i. Billed F& C Services $14,500 for services rendered.
j. Purchased land as the site of a future office for $10,000. Paid $3,000 cash as a down
payment and
signed a note payable for the balance.
k. Received the April telephone bill for $1,950 to be paid next month.

Required:
For each of the transactions, prepare journal entries. Be sure to categorize each
account as an asset (A), liability (L), stockholders’ equity (SE), revenue (R), or
expense (E).

2. ABC Corp was organized on January 1, current year. At the end of the current year, the
following financial data are available:
a. Total revenues $ 299,000
b. Total expenses (excluding income taxes) 184,000
c. Income tax expense (all unpaid as of December 31) 34,500
d. Cash 70,150
e. Receivables from customers (all considered collectible) 34,500
f. Merchandise inventory (by inventory count at cost) 96,600
g. Payables to suppliers for merchandise purchased from them (will be paid during the
following year) 26,450
h. Common stock 59,800

No dividends were declared or paid during the first year.

Required:
Preparing an Income Statement and Balance Sheet
1. Answer

Assets

Account Receivable $ 23.500

Supplies (2.600)
Inventories (3.800)
Prepaid Expenses (1.400)
Total assets $15.700

Liability and stockhholder equity

Liability
Account Payable $ 3.005
Employe Wages 8.000
Total liability $ 11.005

Stockhholder equity
Common stock $ 45
Total stockholder equity $ 45

Total liability and stockholder equity $ 11.050

Revenue $12.500
Expense $ 19.450

2. Answer

ABS Corp
Balance Sheet

Assets
Revenue $ 299.000
Cash 70.150
Accounts receivable 34.500
Supplies (96.600)
Total assets $ 307.050
Liability and stockhholder equity
Liability
Account Payable $ 184.000
Notes Payable 26.450
Tax payable 34.500
Total liability $ 244.950

Stockhholder equity
Common stock $ 59.800
Total stockholder equity $ 59.800

Total liability and stockholder equity $ 304.750

Not balance….Hmmmm