Problem: ABD Co. began operating on January 1st, 2006. on December 31st, 2006 the company records showed the following account balance :
The following transactions occurred during 2006 :
1- Collected $7,000 from Accounts Receivable.
2- Purchased supplies of $5,000 in cash.
3- Purchased equipment for $5,000 with cash. The equipment has an expected life of 4 years and expected salvage value of $1,000.
4- Paid the salaries payable of $1,000.
5- Paid rent expenses of $6,000.
6- The owner drew $2,000 cash for personal uses.
7- Paid salaries expenses of $3,000.
8- Paid $4,000 of Accounts payable.
Additional information:
9- A count of the supplies revealed that $5500 remained on Hand at year-end.
10- The rent expenses paid in transaction No.3 are related to two years ended by 31st of December 2008.
Required "
1) Prepare the Journal Entries.
2) Post them into Only "Cash" balance column Accounts and "Account receivable" & "Account Payable" T-Accounts.
3) Prepare the adjusting entries.
4) Prepare the "Income Statement" and the "Balance Sheet" for 2006