a. Received the following contributions (at fair value) to the business from the owner when it was started in exchange for 1,000 sharesof $1 par value common stock in the new company:BuildingTools and equipmentb. Earned service fees during the current year of $87,000; of the cash collected, $20,000 was for deposits from customers on work tobe done by Julio in the next yearc. Received the cash dividends on shares of ABC Industrial stock purchased by Julio Estela six years earlier (the stock was not ownedby the company).$21,000 Land17,000 Cashd. Incurred operating expenses during the current year of $61,000.e. Determined amount of supplies on hand (unused) at the end of the current year as $700.f. A temporary employee, subsequently fired, stole $500 cash from the business. There was no insurance coverage for theft.g. Purchased tools and equipment during the year.Required:1. On what basis did Julio prepare the income statement?2. Reconstruct the correct entries under accrual accounting principles and post the effects to T-accounts.3. Prepare an accrual-based income statement, statement of stockholder's equity (only one shareholder), and a classified balancesheet.$20,0001,000Complete this question by entering your answers in the tabs below.Required 1 Required 2a Required 2b Required 3a Required 3bBeginning balanceStock issuancePrepare a statement of stockholder's equity (only one shareholder).CommonStockAdditional Paid-in CapitalRetainedEarningsEnding balance$0 $0 $< Required 3aRequired 3cTotal Stockholder'sEquity0 $Required 3c>0

Answer 1:Julio has prepared the income statement on a cash basis.

Required: 1. On what basis did Julio prepare the income statement? 2. Reconstruct the correct entries under accrual accounting principles and post the effects to T-accounts. 3. Prepare an accrual-based income statement, statement of stockholder's equity (only one shareholder), and a classified balance sheet. Complete this question by entering your answers in the tabs below. Required 1 Required 2a Required 2b Required 3a Required 3b Required 3c Prepare a statement of stockholder's equity (only one shareholder).

Required: 1. On what basis did Julio prepare the income statement? 2. Reconstruct the correct entries under accrual accounting principles and post the effects to T-accounts. 3. Prepare an accrual-based income statement, statement of stockholder's equity (only one shareholder), and a classified balance sheet. Complete this question by entering your answers in the tabs below. Required 1 Required 2a Required 2b Required 3a Required 3b Required 3c Prepare a statement of stockholder's equity (only one shareholder).

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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