Collect information that will enable you to determine the
balances in all accounts at
the end of Year 2.
Michael Company [the firm] was formed on February 28, Year 1, when five people each
On that same date, one investor lent $40,000 to the firm that is to be
repaid on February 28, Year 2, along with $7,200 of interest.
The firm leased an office space for one year on March 1, Year 1, moving in the same day.
The monthly rate was $7,000 and the rent for the entire year had to be paid on November
1, Year 1.
On March 1, Year 1, the firm rented some equipment for one year.
The firm paid $18,000
at the time of signing the rental agreement.
This amount covers the entire 12-month lease
On March 12, Year 1, the firm purchased supplies on account at a cost of $9,000.
On March 14, Year 1, the firm returned 25% of the supplies because of defects.
On April 1, Year 1, the firm hired seven employees at a monthly salary of $5,000 each.
These employees started working immediately.
These employees are to be paid at the
middle of each month for the period ending on that day. Their first payday will be on April
15, Year 1, and covers the first half of April.