Reference no: EM132641195

Problem 1: Record the following summary transactions for the second year (20X2) of business activities for Mechanical Engineers Group, Inc. on the worksheet provided below

Summary transactions:

1. Issued 2,000 additional shares of common stock at $5 per share.

2. Purchased additional land for $7,000 cash. 

3. Collected $7,000 on accounts receivable from earlier sales.

4. Billed clients $42,000 for services performed during 20X2, collecting $31,000 at the time services were rendered with the remaining $11,000 not yet collected at year-end December 31, 20X2.

5. Paid $20,000 cash on the principal of the mortgage payable.

6. Incurred other expenses (interest on the debt, taxes, salaries, utilities, etc.) during the year 20X2 of $24,000, of which $18,000 was paid in cash during 20X2, with $6,000 remaining in accounts payable at year-end December 31, 20X2.

7. Paid $4,000 on accounts payable.

8. Recorded $3,000 in depreciation expense on the building for the year ended December 31, 20X2 (original cost of the building was $300,000). [Note: In the interest of space, use the Building (net) account and the Expense account shown on the Problem 1 Worksheet rather than an accumulated depreciation account and a depreciation expense account respectively.]

9. Declared and paid dividends to shareholders of $1.00 per common share. (Note: At the beginning of year 20X2, there were 10,000 shares of common stock outstanding. During 20X2, recall that an additional 2,000 shares were issued (see entry #1). The $1.00 per share dividend applies to all 12,000 shares.)