The ABC Company started its operations during the 20th century. Many years later, the balance sheet for December 31, 2012, showed the following account balances (there were no other accounts listed): Paid in capital (OE) 500, Loan from bank (L) 28, Prepaid advertising (A) 10, PP&E (A) 410, Interest receivable (A) 5, Cash (A) 618, Wages payable (L) 10, Accounts payable (L) 1, Loan to ABC (A) 25, Accumulated depreciation 145, Accounts receivable (A) 120, Retained earnings (OE) 781, Trademark (A) 195, Prepaid rent (A) 7, Advances to suppliers (A) (?). During 2013 the following transactions occurred: 1. Cash sales were $800, credit sales were $1,200 and the ending balance of accounts receivable was $210. 2.ABC Company purchased $1,706 worth of inventory, and paid its suppliers $1,607. 3.ABC Company signed a contract to hire a new manager for the 2014 year with an annual salary of $180. 4. A new machine was purchased, in cash, for $200. Depreciation expense for the year was $80. 5. In addition to the transactions in item 2 above, ABC Company purchased, from the supplier it had advances with on December 31, 2012, 120 units of Silicon-Valleys (also part of inventory), at $2.50 per unit. By the end of the year,ABC Company settled the account with this supplier, and paid the remainder of what it owed in full (taking into consideration the advances account, and any potential payable that could have been created during the year for this specific supplier). 6. ABC Company declared a dividend of $75, and paid $60 of it in cash. 7. Fire Company paid ABC Company $37 in total; $5 for the interest related to last year (recorded as an interest receivable in 2012), $7 for interest related to the current year (2013), and the rest ($25) against the loan principal. 8. On the first day of 2013, ABC Company sold to RGH, for $195 cash (i.e., neither a gain nor a loss), the trademark. 9. Ending inventory, including the remaining units of Silicon-Valleys, equaled $106. 10. The employees of ABC Company earned $75, and were paid $80, in wages (do not forget the wages payable account). 11. Rent expense for 2013 was $150, while rent payments were $136 (do not forget the prepaid rent account). 12. ABC Company accrued interest of $8 on its loan from the bank. No payments were made during the year. 13. The CFO of ABC Company was invited to a dinner at CBS. She believes that the knowledge generated during the dinner will reduce expenses next year by $150. 14. The prepaid advertising was used, in full, during the year. Required: a. What was the balance of the account Advances to suppliers on December 31, 2012?

The ABC Company started its operations during the 20th century. Many years later, the balance sheet for December 31, 2012, showed the following account balances (there were no other accounts listed): Paid in capital (OE) 500, Loan from bank (L) 28, Prepaid advertising (A) 10, PP&E (A) 410, Interest receivable (A) 5, Cash (A) 618, Wages payable (L) 10, Accounts payable (L) 1, Loan to ABC (A) 25, Accumulated depreciation 145, Accounts receivable (A) 120, Retained earnings (OE) 781, Trademark (A) 195, Prepaid rent (A) 7, Advances to suppliers (A) (?). During 2013 the following transactions occurred: 1. Cash sales were $800, credit sales were $1,200 and the ending balance of accounts receivable was $210. 2.ABC Company purchased $1,706 worth of inventory, and paid its suppliers $1,607. 3.ABC Company signed a contract to hire a new manager for the 2014 year with an annual salary of $180. 4. A new machine was purchased, in cash, for $200. Depreciation expense for the year was $80. 5. In addition to the transactions in item 2 above, ABC Company purchased, from the supplier it had advances with on December 31, 2012, 120 units of Silicon-Valleys (also part of inventory), at $2.50 per unit. By the end of the year,ABC Company settled the account with this supplier, and paid the remainder of what it owed in full (taking into consideration the advances account, and any potential payable that could have been created during the year for this specific supplier). 6. ABC Company declared a dividend of $75, and paid $60 of it in cash. 7. Fire Company paid ABC Company $37 in total; $5 for the interest related to last year (recorded as an interest receivable in 2012), $7 for interest related to the current year (2013), and the rest ($25) against the loan principal. 8. On the first day of 2013, ABC Company sold to RGH, for $195 cash (i.e., neither a gain nor a loss), the trademark. 9. Ending inventory, including the remaining units of Silicon-Valleys, equaled $106. 10. The employees of ABC Company earned $75, and were paid $80, in wages (do not forget the wages payable account). 11. Rent expense for 2013 was $150, while rent payments were $136 (do not forget the prepaid rent account). 12. ABC Company accrued interest of $8 on its loan from the bank. No payments were made during the year. 13. The CFO of ABC Company was invited to a dinner at CBS. She believes that the knowledge generated during the dinner will reduce expenses next year by $150. 14. The prepaid advertising was used, in full, during the year. Required: a. What was the balance of the account Advances to suppliers on December 31, 2012?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

During 2013 the following transactions occurred:
1. Cash sales were $800, credit sales were $1,200 and the ending balance of accounts receivable
was $210.
2.ABC Company purchased $1,706 worth of inventory, and paid its suppliers $1,607.
3.ABC Company signed a contract to hire a new manager for the 2014 year with an annual salary of
$180.
4. A new machine was purchased, in cash, for $200. Depreciation expense for the year was
$80.
5. In addition to the transactions in item 2 above, ABC Company purchased, from the supplier it had
advances with on December 31, 2012, 120 units of Silicon-Valleys (also part of inventory), at
$2.50 per unit. By the end of the year,ABC Company settled the account with this supplier, and
paid the remainder of what it owed in full (taking into consideration the advances account,
and any potential payable that could have been created during the year for this specific
supplier).
6. ABC Company declared a dividend of $75, and paid $60 of it in cash.
7. Fire Company paid ABC Company $37 in total; $5 for the interest related to last year (recorded as an
interest receivable in 2012), $7 for interest related to the current year (2013), and the rest
($25) against the loan principal.

8. On the first day of 2013, ABC Company sold to RGH, for $195 cash (i.e., neither a gain nor a
loss), the trademark.
9. Ending inventory, including the remaining units of Silicon-Valleys, equaled $106.
10. The employees of ABC Company earned $75, and were paid $80, in wages (do not forget the
wages payable account).
11. Rent expense for 2013 was $150, while rent payments were $136 (do not forget the prepaid
rent account).
12. ABC Company accrued interest of $8 on its loan from the bank. No payments were made during
the year.
13. The CFO of ABC Company was invited to a dinner at CBS. She believes that the knowledge
generated during the dinner will reduce expenses next year by $150.
14. The prepaid advertising was used, in full, during the year.

Required:
a. What was the balance of the account Advances to suppliers on December 31, 2012?
b. Record all transactions that occurred during 2013 using journal entries. After the account
name, include a label for the classification of the type of account (e.g. Cash (A)).
c. Prepare an Income Statement for the year ended December 31, 2013.
d. Prepare a Balance Sheet for December 31, 2013.

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