The following transactions apply to Baker Co. for 2010, its first year of operat
ID: 2469091 • Letter: T
Question
The following transactions apply to Baker Co. for 2010, its first year of operations.
1. Issued $180,000 of common stock for cash.
2. Provided $88,000 of services on account.
3. Collected $74,000 cash from accounts receivable.
4. Loaned $13,000 BBC on September 1, 2010. The note had a one-year term to maturity and an 8 percent interest rate.
5. Paid $36,000 of salaries expense for the year.
6.Paid a $3,500 dividend to the stockholders.
7. Recorded the accrued interest on December 31, 2010 (see item 4).
8. Uncollectible accounts expense is estimated to be 1 percent of sales on account.
Required:
a. Record the above transactions in general journal form.
b. Post the entries to T-accounts.
c. Prepare the income statement, balance sheet, and statement of cash flows for 2010.
d. Show the effects of the above transactions in a horizontal statements model.
Explanation / Answer
journal entries:
Income Statement
Less: Expenses:
Balance Sheet:
Cash Account is the Cash Flow Statement being single year
d: horizontal statements model:
Date Accounts Title and explanation Debit $ Credit $ 1 Cash 180000 Common Stock 180000 2 Accounts Receivable 88000 Service revenue 88000 3 Cash 74000 Accounts Receivable 74000 4 Cash 13000 Note Payable 13000 5 salaries expense 36000 Cash 36000 6 Dividend 3500 Cash 3500 7 Interest Expense 347 Interest Payable 347 8 Bad Debts 880 Allowance for Doubtful Accounts 880 (88000 * 1%) T- ACCOUNTS ENTRIES Cash 180000 36000 74000 3500 13000 C. Balance 227500 267000 Total 267000 common stock 180000 Accounts Receivable 88000 74000 C balance 14000 88000 Total 88000 Service Revenue 88000 Note Payable 13000 Salaries Expense 36000 Dividend 3500 Interest Expense 347 Interest Payable 347 Bad Debts 880 Allowance for Doubtful Accounts 880