Assignment -
Instructions: Answer all 4 questions. Must provide a response in order to received partial credit.
Question 1: During March, the following transactions were completed by ABC Inc., a new business started on March 1, 2015.
March 1 Sold 20,000 shares of $10 par value stock for $200,000 cash.
March 1 Purchased equipment for $36,000, paying $6,000 cash, charging the balance on account.
March 3 Purchased office supplies for $5,000 on account.
March 5 Paid $3,600 cash for 1-year insurance policy effective March 1. Use the account Prepaid Insurance to record this asset.
March 12 Billed customers $8,000 for professional services.
March 18 Paid $12,000 cash on amount owed on equipment and $3,000 on amount owed on office supplies.
March 20 Paid $7,000 cash for employee salaries.
March 21 Collected $4,000 cash from customers billed on March 12.
March 25 Billed customers $10,000 for professional services.
March 31 Paid $1,200 for the monthly utilities for the office.
March 31 Paid cash dividend of $.80 per share to shareholders
1. Journalize the Transactions, omitting explanations
2. Create T Accounts on a paper you will not submit to accumulate information for the remaining requirements of this problem
The following additional information is provided for your use before preparing the income statement:
Unbilled and uncollected revenue for services performed as of March 31 is $12,000.
Depreciation on equipment for the month was $600.
An inventory count shows $1,000 of office supplies on hand at March 31.
Accrued but unpaid employee salaries were $4,000 (the salaries have not yet been recorded).
3. Prepare any necessary journal entries to record the above adjustments
4. Prepare any additional journal entries to properly record expenses, assuring the balance sheet accounts will be properly presented.
5. Prepare the appropriate closing entries for the month of March, 2015.
6. Update your T Accounts on the paper you will not submit
7. Prepare the Income Statement, for the month ending March 31, 2015.
8. Prepare the Statement of Owners Equity for the month ending March 31, 2015
9. Prepare the Classified Balance Sheet for March 31, 2015.
Question 2: Explain the order for doing financial statements. That is, what financial statement do you complete first and what 'value' do you use from this financial statement to complete the next financial statement. Do not consider the statement of cash flows. You can create a list and use bullet points or create a paragraph.
Question 3: Using as few words as possible, explain the terms relevance, reliability, and materiality in terms of accounting and financial reporting. Separately, use at least one sentence for each of the three terms.
Question 4: Who are the 'users' or stakeholders who may access and read financial statements? Create one sentence or bullet point for each user (stakeholder) and explain why they may have an interest in the financial statements.