In the first year of operations Lien Company entered into the following transactions among others: a. 1
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Question:
In the first year of operations Lien Company entered into the following transactions among others:
a. 1 January bought equipment 105000.
b. 31 march prepaid one year’s rent 24000.
c. 1 July took out a one year loan from the bank at an annual interest rate of 8 percent 20000.
d. 1 August received payment for services not yet rendered 12000.
On 31 December lien has earned 8000 of the 12000 in transaction 4 and has incurred but not recorded 450 of electricity. Lien prepares adjusting entries on an annual basis.
Required:
Prepare journal entries for transactions a and d. prepare any adjusting journal entries needed at 31 December. Assume that the equipment depreciates 15000 annually.
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