FM Midterm January 2014: T-Account Analysis During 2013 the following events took place for a small distribution company. You are required to prepare the accounting entries for each event by: – labelling the T-accounts with the correct account name – labelling debit and credit on the T-account – entering the amounts for the event on the correct side of each T-account. You are only required to enter the events as described in 2013; do not attempt to combine all 12 events into a single financial statement. Note that answers may require more or less than four Taccounts. Explain any assumptions. 1. On December 31st the company sells on credit $5,000 of goods which had been bought a month previously at a cost of $3,500. 2. On January 2nd the company paid $500 by check for a three year buildings insurance policy. 3. On December 31st the company sells an unwanted machine for $1,500. The machine was bought at the beginning of 2012 for $8,200 and was expected to be used for three years after which its value had been forecast to be $1,000. 6. On December 31st the company reads an announcement in the newspaper that one of their customers, who currently owes $2,000 for goods shipped in November, has filed for bankruptcy. 4. Due to a shortage of cash the company was unable to pay December wages of one manager totalling $750, but promises to do so by January 15th 2014. 5. On December 31st the manager reads the electricity meter and realises that they will owe $100 more for electricity used than they had previously estimated. 8. During 2013 the company spent $20,000 on a project with a research company for a new product which they initially expected to introduce in 2015, but which now seems to be much less certain. 9. On December 1st the company placed an order for $12,000 of goods from a Chinese supplier, and paid a deposit of $6,000, with the remaining payment due when the goods have been delivered. The goods will be delivered in January 2014 and advertised for sale at $20,000. 7. In February the company declared that dividends of $7,000 would be paid for 2012 and these were subsequently paid in May. 10. The company’s managing director borrowed $1,000 in cash from the company on December 31st . 12. The company owns a building which is on its Balance Sheet for a value of $250,000. On December 31st the company’s finance manager received a call from a developer who explains that he is prepared to offer $500,000 for the building.