The ABC Company had the following transactions in 2021, the first year of its operations: 1. Issued 10 shares of stock at $6 per share; 2. Borrowed $100; 3. Purchased building for $100; 4. Purchased inventory on credit for $60; 5. Paid supplier $40; 6. Company president sold 2 shares of ABC stock from his personal holding; 7. As a favor to the company president, Robert Redford displayed the company logo in his movie; 8. Sold merchandise for $80 on credit; 9. Cost of the merchandise sold in (8) is $50; 10. Salary paid to managers, $5; 11. Use of building (useful life = 18 years, salvage value = $10); 12. Interest expense on loan @ 5%; 13. Dividends declared and paid, $5. Questions: Prepare: (1) an income statement, (2) a statement of retained earnings, (3) a balance sheet, and (4) a statement of cash flows for the first year of the ABC Company.
The ABC Company had the following transactions in 2021, the first year of its operations: 1. Issued 10 shares of stock at $6 per share; 2. Borrowed $100; 3. Purchased building for $100; 4. Purchased inventory on credit for $60; 5. Paid supplier $40; 6. Company president sold 2 shares of ABC stock from his personal holding; 7. As a favor to the company president, Robert Redford displayed the company logo in his movie; 8. Sold merchandise for $80 on credit; 9. Cost of the merchandise sold in (8) is $50; 10. Salary paid to managers, $5; 11. Use of building (useful life = 18 years, salvage value = $10); 12. Interest expense on loan @ 5%; 13. Dividends declared and paid, $5. Questions: Prepare: (1) an income statement, (2) a statement of retained earnings, (3) a balance sheet, and (4) a statement of cash flows for the first year of the ABC Company.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The ABC Company had the following transactions in 2021, the first year of its operations:
1. Issued 10 shares of stock at $6 per share;
2. Borrowed $100;
3. Purchased building for $10O;
4. Purchased inventory on credit for $60;
5. Paid supplier $40;
6. Company president sold 2 shares of ABC stock from his personal holding;
7. As a favor to the company president, Robert Redford displayed the company logo in his movie;
8. Sold merchandise for $80 on credit;
9. Cost of the merchandise sold in (8) is $50;
10. Salary paid to managers, $5;
11. Use of building (useful life = 18 years, salvage value = $10);
12. Interest expense on loan @ 5%;
13. Dividends declared and paid, $5.
Questions:
Prepare: (1) an income statement, (2) a statement of retained earnings, (3) a balance sheet, and (4) a
statement of cash flows for the first year of the ABC Company.
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