lecture 3 extra practice - AIM 6305 LECTURE 3 PRACTICE...

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AIM 6305 LECTURE 3 PRACTICE PROBLEM X.GLORIA LIU PRACTICE PROBLEM 1 Tax Solutions’s accounting records reflect the following account balances at December 31, 2004: Building $560,000 Accumulated Depreciation - Bldg $ 112,000 Cash $ 90,000 Capital Stock $343,000 Supplies $ 5,000 Retained Earnings $200,000 During 2005, the following transactions occurred: 1) On March 1, purchased a one-year insurance policy for $1,200 cash. 2) On April 1, borrowed $10,000 cash from First American Bank. The interest rate on the note payable is 6%. Principal and interest is due in cash in one year. 3) Employee salaries in the amount of $20,000 were paid in cash. 4) At the end of the year, $400 of the supplies remained on hand. 5) Earned $45,000 in tax consulting revenue during 2005 in cash. 6) At December 31, $5,000 in employee salaries were accrued. 7) On December 31, received $2,000 in cash representing advance payment for services to be provided in February of 2006. 8) The building has a useful life of 25 years and no salvage value.
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