ABC started operations on January of 2020.

Here is the Balance Sheet of ABC after three years of operations:

Balance Sheet December 31 2022
ASSETS
Current assets
Cash		57,160
Accounts receivable		40,000
Total assets		97,160
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Accounts payable		20,000
Tax payable		2,000
Loan - part within one year		7,981
Non-current liabilities
Loan		17,179
Total liabilities		47,160
Shareholder's equity
Capital		40,000
Retained earnings		10,000
Total shareholder's equity		50,000
Total liabilities and shareholder's equity		97,160

ABC experienced the following transactions for 2023:

Transactions for 2023

- Settle all payables and receivables from 20X2 if any: accounts payables, receivables…

- Provided services for 55 000. At the end of the year, 20% are not yet paid.

- Paid salaries for 10 000.

- Incurred other operating expenses for 15 000. 10 000 were paid in cash, the rest of it is due to the suppliers.

- Net earnings for 20X0 were -2000; net earnings for 20X1 were 5 000. During 20X3, shareholders decided on a dividend of 50% of 20X2 net earnings. This dividend was paid in 20X3. Hint: first calculate net earnings for 20X2 taking into account retained earnings from the initial Balance Sheet.

- At the end of the year, ABC purchased two computers and printing equipment for 14 000 (paid cash).

Additional information for 2023

A. The loan has an annual interest rate of 5% (5 years). Payments are made annually (see table below).

Date	Capital borrowed	Annual cash payment	Interest	Amortization	Payment date	Remaining capital to be repaid
1/1/2021	40,000	9,239	2,000	7,239	31/12/2021	32,761
1/1/2022	32,761	9,239	1,638	7,601	31/12/2022	25,160
1/1/2023	25,160	9,239	1,258	7,981	31/12/2023	17,179
1/1/2024	17,179	9,239	859	8,380	31/12/2024	8,799
1/1/2025	8,799	9,239	440	8,799	31/12/2025	0

B. Earnings before taxes is taxed at 30%. Taxes are paid the following year.

Needed:

1. Draw an accounting equation and record the effects of each accounting event under the appropriate headings

2. Prepare an income statement, balance sheet and statement of cash flows for each year. Use the vertical format when you prepare the financial statements

Answer rating: 100% (QA)

Accounting Equation Assets Liabilities Equity Transactions for 2023 Assets Cash opening 57160 Receiv... View the full answer