Posted: March 6th, 2014
Ohio Mining Company was formed on January 1, 2010. Events
Ohio Mining Company was formed on January 1, 2010.
Events Affecting the 2010 Accounting Period
1. Acquired cash of $60,000 from the issue of common stock.
2. Purchased $1,600 of supplies on account.
3. Purchased land that cost $20,000 cash.
4. Paid $1,600 cash to settle accounts payable created in Event 2.
5. Recognized revenue on account of $68,000.
6. Paid $22,000 cash for other operating expenses.
7. Collected $46,000 cash from accounts receivable.
Events Affecting the 2010 Accounting Period
1. Acquired cash of $60,000 from the issue of common stock.
2. Purchased $1,600 of supplies on account.
3. Purchased land that cost $20,000 cash.
4. Paid $1,600 cash to settle accounts payable created in Event 2.
5. Recognized revenue on account of $68,000.
6. Paid $22,000 cash for other operating expenses.
7. Collected $46,000 cash from accounts receivable.
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Information for 2010 Adjusting Entries
8. Recognized accrued salaries of $2,100 on December 31, 2010.
9. Had $200 of supplies on hand at the end of the accounting period.
Events Affecting the 2011 Accounting Period
1. Acquired an additional $20,000 cash from the issue of common stock.
2. Paid $2,100 cash to settle the salaries payable obligation.
3. Paid $4,800 cash in advance for a lease on office facilities.
4. Sold land that had cost $20,000 for $20,000 cash.
5. Received $6,600 cash in advance for services to be performed in the future.
6. Purchased $1,200 of supplies on account during the year.
7. Provided services on account of $56,000.
8. Collected $61,000 cash from accounts receivable.
9. Paid a cash dividend of $5,000 to the stockholders.
Information for 2011 Adjusting Entries
10. The advance payment for rental of the office facilities (see Event 3) was made on September 1 for a one-year lease term.
11. The cash advance for services to be provided in the future was collected on June 1 (see Event 5). The one-year contract started June 1.
12. Had $200 of supplies on hand at the end of the period.
13. Recognized accrued salaries of $3,200 at the end of the accounting period.
Required
a. Identify each event affecting the 2010 and 2011 accounting periods as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Record the effects of each event under the appropriate general ledger account headings of the accounting equation.
b. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2010 and 2011, using the vertical statements model.
Information for 2010 Adjusting Entries
8. Recognized accrued salaries of $2,100 on December 31, 2010.
9. Had $200 of supplies on hand at the end of the accounting period.
Events Affecting the 2011 Accounting Period
1. Acquired an additional $20,000 cash from the issue of common stock.
2. Paid $2,100 cash to settle the salaries payable obligation.
3. Paid $4,800 cash in advance for a lease on office facilities.
4. Sold land that had cost $20,000 for $20,000 cash.
5. Received $6,600 cash in advance for services to be performed in the future.
6. Purchased $1,200 of supplies on account during the year.
7. Provided services on account of $56,000.
8. Collected $61,000 cash from accounts receivable.
9. Paid a cash dividend of $5,000 to the stockholders.
Information for 2011 Adjusting Entries
10. The advance payment for rental of the office facilities (see Event 3) was made on September 1 for a one-year lease term.
11. The cash advance for services to be provided in the future was collected on June 1 (see Event 5). The one-year contract started June 1.
12. Had $200 of supplies on hand at the end of the period.
13. Recognized accrued salaries of $3,200 at the end of the accounting period.
Required
a. Identify each event affecting the 2010 and 2011 accounting periods as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Record the effects of each event under the appropriate general ledger account headings of the accounting equation.
b. Prepare an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for 2010 and 2011, using the vertical statements model.
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