ABCDEFGHIJKLMNOPQRSTUVWXYZ
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Accounts Receivable 45, Advances from customers 40, Accumulated depreciation 10, Paid in capital 500, Retained earnings 57,
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Property plant and equipment (gross) 200, Inventory 75, Accounts payable 40, Cash 309, Prepaid rent (?).
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4
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a)DEF COMPANY
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Balance Sheet
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December 31, 2018
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AssetsLiabilities and SE
10
CashAccounts Payable
11
Accounts Receivable
Advances from Customers
12
Inventory
13
Prepaid Rent
14
Total Current AssetsTotal Liabilities
15
PP&E, GrossPaid In Capital
16
Less: Accumulated DepreciationRetained Earnings
17
Net PP&E
18
Total Long Term AssetsTotal SE
19
Total Assets
Total Liabilities and SE
20
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Total Assets = Cash + A/R + Inventory + Prepaid Rent + Gross PP&E - Acc. Depreciation
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PR = Total Assets - Cash - A/R - Inventory - Net PP&E
24
25
26
27
28
29
30
31
During 2019 the following transactions occurred:
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1
DEF purchased $375 worth of inventory on account.
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2
Payments on Accounts payable were $365.
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3
Cash sales were $260; credit sales were $360.
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4Ending inventory was $59.
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5Depreciation expense was $20.
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6
Collections from customers (not including cash sales) were $312.
39
7
The Prepaid rent had expired during the year.
40
8
DEF hired one employee, who worked for the entire year at $4 per month. At the end of the year DEF owes its employee $6.
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9
Dividend of $24 was declared and paid during 2019.
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10
On the last day of the year, DEF gave a loan of $50 to its twin sister company, ABC.
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11
Advances from customers account remained intact during 2019.
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45
b) 1/ Purchase of Inventory on Account Increase Decrease
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Asset Debit Credit
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Liabilitiy Credit Debit
48
Expense Debit Credit
49
Revenue Credit Debit
50
Equity Credit Debit
51
2/ Payments on Accounts Payable
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53
54
55
56
57
3/ Sales Revenue
58
59
60
61
62
63
64
4/ Ending Inventory was $59
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First, we want to find out COGS:
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Ending Inventory = Beginning Inventory + Purchases - COGS
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COGS = BI + Purchases - EI
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COGSBeginning InventoryPurchases (transaction 1)Ending Inventory
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 0.00
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74
75
76
77
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5/ Depreciation Expense
79
80
81
82
83
84
6/ Collections from Customers
85
86
87
88
89
7/ Rent Expiring
90
91
92
93
94
95
8/ Wages Paid to Employees
96
97
98
99
100