Accounting Problem Set

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MBA 606Problem Set Worth 60 points due at the end of Week 2Be sure to include a cover page for this assignment. Part I – Booking Transactions using Journal Entries The Topanga Company provides legal services to its customers. At the beginning of 2016, the company had the following balances in its financial accounting records: DEBIT CREDIT Cash $16,200 Accounts Receivable $1,800 Building $4,800 Accumulated Depreciation – Building $2,800 Notes Payable $2,000 Common Stock $15,000 Retained Earnings $3,000Notes Payable represents money that won’t need to be paid back for a long time. The company pays interest (in cash) every December 31 at a rate of 9%.Building was purchased 28 years ago and is expected to last another 20 years (a total of 48 years)For each of the transactions below, write journal entries in a manner that makes it CLEAR which accounts are debited and which are credited. Failure to do this will be rewarded with NO credit.Transaction 1: On April 1, the company pays 3 years of rent in advance with $7,200 cash. Transaction 2: On April 11, the company buys $20,000 of Inventory and the supplier trusts them to eventually pay (credit Accounts Payable). Transaction 3: On May 1, the company finds someone willing to buy $4,000 of Inventory for $14,000. The company delivers it immediately. The customer puts down $8,000 in Cash immediately AND is known to have excellent credit scores.Transaction 4: On August 26, the company gets a Utilities bill for $3,000 and pays it immediately.Transaction 5: On December 15, the company pays $2,000 (Cash) for some the Inventory it bought on April 11.Transaction 6: On December 15, the company pays out a $1,000 cash dividend to its owners.Part II – Booking AdjustmentsNow, it is December 31, 2016. For each of the transactions below, write journal entries in a manner that makes it CLEAR which accounts are debited and which are credited. Failure to do this will be rewarded with NO credit.9 months of the rent purchased on April 1 has been “used up”Deal with Annual DepreciationDeal with Annual Interest on the Note PayablePart III – Preparing Financial Statements 1. Prepare a well-formatted Income Statement for The Topanga Company for the year ended December 31, 2016. The Topanga CompanyIncome Statement For the Year Ended December 31, 20162. Prepare a well-formatted Balance Sheet for The Topanga Company as of December 31, 2016.The Topanga CompanyBalance Sheet As of December 31, 2016

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