Reference no: EM132867188
XYZ Company, which is in merchandising business, has been operating its business for years. The following were the transactions in 2019:
Jan 1 - Shareholder Mr. X invested in the company. The company issued capital stock to Mr. X in exchange for $80,000 cash.
Jan 1 - Purchased an equipment for $25,000 and paid cash. The useful life of the equipment is 5 years with residual value $5,000. Straight line depreciation will be adopted for this equipment.
July 5 - Provided services to a client with revenue $40,000. The client paid $20,000 cash and the residual amount will be settled in 2019.
Dec 31 - Paid utilities expense $25,000 in cash.
Problem a) Prepare journal entries for the year 2019
Problem b) Calculate the amount of depreciation
Problem c) Prepare the Income Statement for 2019