The following transactions pertain to Tree Corporation for 2015
Jan. 1 Began operations when the business acquired $750,000 cash from the issue of common stock.
Jan. 1 Paid rent for office space for two years, $38,000 cash. Placed in a prepaid account.
Feb.15 Purchased $2,800 of supplies and paid cash.
April 1 Borrowed $50,000 cash from the First National Bank. The note had a 6 percent annual rate of interest and matures in one year.
May 1 Purchased inventory for $290,000 on account.
July1 Paid $82,000 cash for a computer system. The computer system had a five-year useful life and $2,000 salvage value.
July 5 Paid $90,000 of the accounts payable from May 1.
Aug 1 Sold inventory costing $170,000 for $480,000 on account.
Sept 1 Paid employee salaries of $60,000 cash.
Sept 9 Collected $265,000 cash from accounts receivable.
Oct 5 Sold inventory costing $70,000 for $200,000 on account.
Nov 2 Paid a total of $40,000 cash dividends to its stockholders (50,000 shares of common stock were outstanding for the entire year).
Adjusting Entries
Dec 31 Record the accrued interest on the note to First National Bank (See April 1 transaction).
Dec 31 Record depreciation on the computer system used in the business (See July 1 transaction).
Dec 31 Record $40,000 of accrued salaries as of December 31.
Dec 31 Record the rent expense for the year (See January 1 transaction).
Dec 31 Physically counted supplies and noted that $1,000 was on hand at the end of the period. Record supplies expense for the year.
1) Record and post the 5 adjusting entries noted above
2) Prepare the following at December 31, 2016:
Multiple step income statement. (Be sure to also show Basic EPS).
Statement of changes in stockholders’ equity.
Classified balance sheet, and
Statement of cash flows using the indirect method (Be sure to prepare Operating, Investing & Financing sections).