Comprehensive problem including depreciation (Appendix)
Bower Consulting Company started the period with cash of $25,000, common stock of $13,000, and retained earnings of $12,000. Bower engaged in the following transactions in 2016:
Transactions during 2016
1. On January 1, 2016, purchased office furniture for $12,000.
2. On March 1, paid $5,400 for an insurance policy that provides coverage for 12 months beginning immediately.
3. Purchased $1,800 of supplies for cash.
4. Provided $39,000 of services for cash.
5. Paid $9,000 for salaries expense.
6. On April 1, received $12,000 for services that will be performed over the next 12 months beginning immediately.
Information for Adjusting Entries
7. The furniture had an estimated life of four years and a $2,000 salvage value. 8. Recognized the expired insurance.
9. An inventory of supplies showed $250 of supplies on hand as of December 31. 10. Recognized the revenue associated with Event 6 as of December 31. Required
a. Record the 10 events in general journal format.
b. Prepare an income statement, balance sheet, and statement of cash flows.