Question

	Balance Sheet
Assets:	12/31/19
Current Assets:
Cash	$               3,000.00
Accounts Receivable	1,250.00
Prepaid Expenses	$                    100.00
Total Current Assets		$               4,350.00
Non-Current Assets:
Property, Plant, and Equipment
Land	$            10,000.00
Buildings	25,000.00
Equipment	15,000.00
Accumulated Depreciation	$          (12,000.00)
Total Property, Plant, and Equipment		$            38,000.00
Total Assets		$            42,350.00
Liabilities:
Current Liabilities
Accounts Payable	$                    100.00
Accrued Expense	150.00
Salary and Wages Payable	-
Notes Payable	-
Unearned Revenue	$               1,500.00
Total Liabilities		$               1,750.00
Shareholder's Equity
Common Stock - $1 par (See Note Below)	$            15,000.00
Retained Earnings	$            25,600.00
Total Equity		$            40,600.00
Total Liabilities and Equity		$            42,350.00

transactions during January 2020:  

1. On January 2, 2020, ACC executed a 3 month- 6% promissory note for $10,000.00 in favor of its
bank, Cheatem Trust Company, Inc. for working capital purposes.
2. An invoice was received from ACC's insurance provider on January 15, 2020, for casualty
insurance coverage in the amount of $2,400.00 for the period January 1, through December 31, 2020.
3. Employees earned salary and wages in January of $6,500.00 which was paid on February 1, 2020.
4. The insurance premium described in transaction 2 was paid on January 31, 2020.
5. Office expense of $1,500 for the month of January was paid in cash on 01/30/20.
6. Insurance expense for the month of January was recorded on 01/31/20.
7. Depreciation expense for the month of January was $1,000.00
8. January service revenue for the Company is $21,000.00. All revenues are recorded as "on account."
9. ACC reviewed its work product for January and determined that it had performed $500.00 of the
services required that were being accounted for as unearned revenue in addition to revenues
described in transaction 8.  

10. ACC recorded interest expense associated with the Note Payable described in transaction 1.
NOTE: Other events possibly
-At the end of January, the Board of Directors voted to shut down and liquidate a component of  the
company's operations. This represents a strategic shift in their operations. The component experienced
a 2,100 loss during January. This was partially offset by a $1,200 gain on the disposition of the assets.
Both of these transactions are net of tax and have already been appropriately reflected in the
Retained Earnings balance shown on the December 31, 2019 Balance Sheet.
-Note 14 of ACC's financial statements for the year ended 12/31/19 indicates the company's
effective tax rate to be 25%.  

-The company's common stock account includes 100,000 shares authorized, 1,000 shares issued
and outstanding.  

Required:  

2.Prepare ACC's Income Statement for the month ending January 31, 2020
3. Prepare ACC's Balance Sheet at January 31, 2020.  

Answer 1

Income Statement
Particulars	Amount
Revenue (21000+500)	$21,500
less-
Insurance	$200
Salaries and wages	$6500
Office expenses	$1,500
Depreciation	$1,000
Interest(10000*6%/12)	$50
To Profit	$12,250
	$ 21,500

ACC COMPANY, INC BALANCE SHEET
JANUARY 31,2020
LIABILTIES	AMOUNT	ASSETS	AMOUNT
Accounts payable	100	Cash (3000+10000-2400-1500)	9100
Accrued expense	150	Prepaid expense (100+2400-200)	2300
Salaries and wages	6500	Accounts Recievable (1250+21000)	22250
Common Stock (15000+10000)	25000	Land	10000
Retained earnings(25600+12250	37850	Building	25000
unearned revenue 1500+500	2000	Equipment 15000
notes payable intrest	50	less: Acc. Depr -12000	3000
TOTAL LIABILITIES	71650	TOTAL ASSETS	71650