The Aleph Bett Gimmel (ABG) Equipment Company started its operations in 2003. Ten years later, the balance sheet for December 31, 2013, showed the following account balances (there were no other accounts listed):
Cash 1,000, Notes Payable 550, Accumulated depreciation 250, Inventory 300, Retained earnings 900, Accounts receivable 400, PP&E 1500, Accounts payable 250, Wages payable 100, Common stock 1,000, Unearned (deferred) revenue (?).
During 2014 the following transactions occurred:
1. Issued 300 common shares for $300.
2. On July 1, borrowed $200 from a bank. The loan carries a 12% interest rate that is paid annually (on June 30 of each year). The principal is due on June 30, 2015.
3. Purchased merchandise inventory for $260 on account.
4. Sold and delivered $550 products to customers with $200 on account and the rest received in cash.
5. The ending balance of the inventory account on December 31, 2014 is $400.
6. On September 22, paid $360 for one year rent (starting at 10/1).
7. Paid employees $250 in wages for work during the year of 2014; paid an additional $100 in wages that ABG owed to employees in 2013.
8. Received a cash advance of $30 for an order that will be delivered next year. The price of the product is $100 and its cost is $76.
9. Depreciation expense was $25.
10. Declared and paid $150 in dividends for the year of 2014.
11. The owner of ABG earned $50 a month at a local McDonalds in order to cover her daughter’s tuition at Hunter College.
Required:
a. What was the balance of the Unearned (deferred) Revenue account on December 31, 2013?
b. Record journal entries for all transactions and related adjusting entries occurred during 2014. (You may also use T accounts.)
c. Prepare an Income Statement for the year ended December 31, 2014.
d. Prepare a Balance Sheet for December 31, 2014.
e. Prepare a Statement of Stockholders’ Equity for December 31, 2014.