Question - The DEF Company had started its operations in 1994. The balance sheet for December 31, 1994, showed the following accounts balances (there were no other accounts listed):
Accounts receivables 145, Advances from customers 140, Accumulated depreciation 30, Paid in capital 500, Retained earnings 59, Property plant and equipment (gross) 210, Inventory 75, Accounts payable 70, Cash 299, Prepaid rent (?).
During 1995 the following transactions occurred:
1. DEF purchased $475 worth of inventory on account.
2. Payments on Accounts payable were $385.
3. Cash sales were $280; credit sales were $350; also customers who made advances received their purchases.
4. Ending inventory was $89.
5. Depreciation expense was $20.
6. Collections from customers (not including cash sales) were $315.
7. The Prepaid rent had expired during the year.
8. DEF hired one employee, who worked for the entire year at $6 per month. The company paid salary on a half-monthly schedule. At the end of the year DEF owes its employee $3.
9. Dividend of $30 was declared and paid during 1995.
10. On the last day of the year, DEF gave a loan of $100 to its twin sister company, ABC.
11. Fresh advances from customers account during 1995 was $110.
Required:
1. What was the balance of the Prepaid rent account on December 31, 1994?
2. Record all transactions (using the spreadsheet format) during 1995.
3. Record journal entries using the debit/credit format for all transactions during 1995.
4. Prepare an Income Statement for the year ended December 31, 1995.
5. Prepare a Balance Sheet for December 31, 1995.