Reference no: EM132978384

Question - Financial Statement Preparation - ABC Company started their business on January 1, the following were the transactions in January:

Jan 1 - Issued capital stock in exchange for $300,000 cash

Jan 1 - Purchased an equipment with original value $80,000, paid $30,000 in cash and $50,000 will be paid in February. The estimated residual value and useful life are $20,000 and 5 years respectively.

Jan 5 - Paid January insurance expense $5,000 in cash.

Jan 10 - Provided services to client X and billed him $20,000.

Jan 15 - Paid January utilities of $5,000 in cash.

Jan 18 - Received $6,000 cash from client X.

Jan 19 - Services valued $9,000 were rendered to client Y but not yet billed.

Jan 31 - Recorded salary expense of $11,000 which to be paid on February 1.

Required -

a) Prepare journal entries for the month January.

b) Post the above entries to the appropriate ledger accounts.

c) Based on the answers in part a and b, prepare the Trial Balance on January 31. Listing sequence: Asset items, Liabilities items, Equity items, Revenue items, Expense items.

d) Based on the information in the Trial Balance, prepare the Income Statement and Balance Sheet for the company.