How do I do the balance sheet, income statement, and what are the closing entries for the following transactions (The startup uses straight line when depreciating long-term assets and a perpetual inventory system. It has an estimated tax rate of 35%.) Jan 1st, issued 500 shares of common stock ($0.10 par value) for $50,000. Feb 1st, paid $25,000 to purchase equipment (estimated useful life 10 years; salvage value = 1,540). Feb 28th, issued 100 shares of common stock ($0.10 par value) for $20,000. June 30th, paid $175,000 for a land by signing a 5 year Note Payable, promising to pay 5% interest on June 30th of each of those 5 years. July 1st, purchased 500 units of inventory at $15 each. $2,000 was paid in cash, the rest was on account. July 30th, sold 220 units of inventory for $63 each on account. The inventory came with a 1 year warranty. The company expects that providing the warranty will cost 1% of the sales made. Aug 2nd, incurred $450 of wages expense. Aug 5th, collected $2500 of accounts receivable. Aug 31st, paid $450 of wages payable. Sept 4th, paid $1600 of accounts payable. Dec 31st, incurred and paid $2,000 of utilities expense. Dec 31st, Purchased a copyright for $10,000. The copyright has a 20-year useful life and no residual value. Dec 31st, Purchased a second piece of equipment for $4,100 (estimated useful life 12 years, salvage value 2,000). The company relies on the percentage of credit sales method, and expects that 2% of credit sales will be uncollectible.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 1BD

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How do I do the balance sheet, income statement, and what are the closing entries for the following transactions

(The startup uses straight line when depreciating long-term assets and a perpetual inventory system. It has an estimated tax rate of 35%.)

Jan 1^st, issued 500 shares of common stock ($0.10 par value) for $50,000.
Feb 1^st, paid $25,000 to purchase equipment (estimated useful life 10 years; salvage value = 1,540).
Feb 28^th, issued 100 shares of common stock ($0.10 par value) for $20,000.
June 30^th, paid $175,000 for a land by signing a 5 year Note Payable, promising to pay 5% interest on June 30^th of each of those 5 years.
July 1^st, purchased 500 units of inventory at $15 each. $2,000 was paid in cash, the rest was on account.
July 30^th, sold 220 units of inventory for $63 each on account. The inventory came with a 1 year warranty. The company expects that providing the warranty will cost 1% of the sales made.
Aug 2^nd, incurred $450 of wages expense.
Aug 5^th, collected $2500 of accounts receivable.
Aug 31st, paid $450 of wages payable.
Sept 4^th, paid $1600 of accounts payable.
Dec 31^st, incurred and paid $2,000 of utilities expense.
Dec 31^st, Purchased a copyright for $10,000. The copyright has a 20-year useful life and no residual value.
Dec 31^st, Purchased a second piece of equipment for $4,100 (estimated useful life 12 years, salvage value 2,000).
The company relies on the percentage of credit sales method, and expects that 2% of credit sales will be uncollectible.

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