Comprehensive Practice Problem
The following list summarizes the transactions that took place during a start up’s first year of operations. Using the information below, prepare a list of the appropriate journal entries, including any necessary adjusting entries, and create a set of financial statements (i.e., balance sheet, income statement, and statement of cash flows). Once you have created the financial statements, provide the appropriate closing entries.
Transactions and information for the year:
A. Issued shares of common stock for $500.
B. Paid $100 to purchase land.
C. Paid $75 for equipment (estimated useful life of 5 years).
D. Purchased 300 units of inventory at $10 each on account.
E. Received a customer order for 200 units at $16 each on account. Delivered 150 of those units.
F. Incurred $250 of wages expense.
G. Collected $2700 of accounts receivable.
H. Paid $225 of wages payable.
I. Estimated tax rate is 35%.