lecture3 - 5) Jan.10.ASD sold $10,000 worth inventory for...

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September 2010 Lecture 3 Sample Problem X. Gloria Liu On January 1, 2008 ASD Company was established. For each of the following transactions, please indicate the effect for that month, on the balance sheet and income statement accounts of the company. Prepare the income statement and balance sheet. 1) Jan.01.The owners invested $100,000 cash in exchange for common stocks. 2) Jan.02.ASD purchased $36,000 worth equipment and paid in cash. 3) Jan.02.ASD purchased a small business insurance policy. The policy will cover the next six months. It costs $6,000. 4) Jan.03.ASD purchased $15,000 inventory. ASD paid $3,000 in cash. According to the contract, ASD should pay the rest before Jan.17.
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Unformatted text preview: 5) Jan.10.ASD sold $10,000 worth inventory for $20,000. The customer paid $10,000 in cash on delivery. 6) Jan.17.ASD paid back the supplier. 7) Jan.31. ASD recognized that ASDs workers earned $4,000 in January; the wage will be paid in February. 8) Jan.31.ASD recognized the depreciation for the equipment purchased Jan.03.ASD uses straight-line depreciation method and estimate the life of the equipment is 3 years. The equipment will have no salvage value after 3 years. 9) Jan.31. ASD adjusted the value of the insurance policy purchased on Jan. 2. 10) Jan.31. The president of the company sold 5,000 shares of his personal holdings through his stockbroker....
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