Problem - Take the transactions listed below and 1) Create Journal Entries for each transaction, then 2) enter them into the Linear Financial Statement, then 3) Enter them into the appropriate T-Accounts, and then 4) Create a Balance Sheet and Income Statement summarizing the transactions and adjustments that are required at the end of the period.
The following transactions relate to Benevento Inc for the year ended December 31, 2017.
1) The two owners of Benevento Inc, Ty and Victor, each deposited $10,000 when the business was created on 2/1/17
2) Benevento went to the bank and borrowed $250,000 on 3/1/17. The terms are 12% per year. Interest is due annually.
3) Benevento purchased a Building for $75,000 and Land for $25,000 on 4/1/17
4) Benevento purchased an insurance policy on 4/1/17 for $6,000. The term of the policy is twelve months.
5) Benevento purchased machinery for $100,000 on 6/1/17
6) Benevento paid $12,000 rent for a storage facility. The rent will cover the period from 5/1/17 to 4/30/18
7) Benevento sold $75,000 of services on account during the year.
8) Benevento collected $50,000 of their accounts receivable before 12/31/17
9) Benevento paid $15,000 in salaries during 12/31/17
10) Benevento incurred $10,000 of Operating Expenses on account during 2017. None of these expenses were paid for at 12/31/17.
A1) - Adjust for the insurance policy at 12/31/17
A2) - Adjust for Prepaid Rent at 12/31/17
A3) - Benevento incurred $5,000 in salaries at the end of 2017 that will be paid in 2018. Record the Accrual
A4) - Benevento received a $10,000 deposit for services in December for work they will begin in February 2018.