Reference no: EM132484570

Question 1: Prepare and post the transactions to the Horizontal Model and make all four financial statements for the year ended December 31, 2019

Transactions:

1. Acquired cash of $225,000 from the issue of common stock.

2. Borrowed $175,000 cash from the bank on April 1, 2019.

3. Paid $285,000 cash to purchase fixed assets - land that cost $65,000 and a building that cost $220,000.

4. Earned and recognized consulting revenue on account for $345,000

5. Collected $325,000 on the accounts receivable during the year

6. Incurred $150,000 of consulting expenses on account during the year.

7. Paid $125,000 on the accounts payable during the year.

8. Paid $175,000 cash for other operating expenses during the year. 9. Received $21,750 cash for services to be performed in the future.

10. On June 1, paid $10,500 cash in advance for a one-year lease to rent office space.

11. Paid $109,450 cash for salaries expense.

12. Paid the company owners $1,500 of dividends. Information for December 31, 2019

ADJUSTING ENTRIES:

13. Completed $11,350 of services performed described in Transaction 9.

14. Adjust Prepaid Rent account for rent used up during the year. (7 months)

15. Use the straight-line method to depreciate the building purchased in Transaction 3. Management estimated that it had a useful life of 20 years. Record the building depreciation.

16. Recognized that $3,647 of Salary Expense has been incurred on December 31. The employees are owed this for the services they provided in December but will not be paid to them until January. Record the year end accrual for salary expense.

17. Accrued interest expense for loan in # 2. Terms: interest rate 4%, in one year. (Loan was outstanding 9 months during 2019).