ISS Inc. began operations on January 1, 2018. It engaged in the following economic events during 2018:

Question:

ISS Inc. began operations on January 1, 2018. It engaged in the following economic events during 2018:
1. Issued 6,000 shares of no-par common stock for $10 per share.
2. Purchased on account 20,000 units of inventory for $1 per unit.
3. Paid and capitalized $7,000 for rent covering 2018 and 2019.
4. Purchased equipment for $30,000, paying $20,000 in cash and signing a long-term note for the remaining balance.
5. Sold on account 8,800 units of inventory for $4 per unit.
6. Paid one-half of the outstanding accounts payable.
7.
Received $12,000 from customers on open accounts.
8. Paid miscellaneous expenses of $10,000 for the year.
9. Depreciation recorded on the furniture totaled $5,000.
10. Accrued interest on the long-term note payable amounted to $1,000.
11. Declared dividends of $3,000 at year-end to be paid in January 2019.
12. Recorded entry for $3,000 of rent expired during 2018.


REQUIRED:
a. Prepare journal entries for these events.
b. Prepare an income statement, statement of shareholders’ equity, balance sheet, and statement of cash flows (indirect method).
c. Compute working capital and the current ratio.
d. Assume that the company pays the outstanding accounts payable on the final day of 2018. Recompute working capital, the current ratio, and cash provided (used) by operating activities.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: