Single-step Income Statement Video Lessons

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# Problem: ABC Company began operations on August 1, 2009 and entered into the following transactions during 2009: 1. On August 1, ABC Company sold common stock to owners in the amount of $200,000 and borrowed$100,000 from the local bank on a 10-month, 12% note payable. 2. On September 1, ABC Company purchased a piece of equipment costing $80,000 by paying$20,000 in cash and agreeing to pay the remainder within six months. The equipment was assigned a 5-year life and a $5,000 residual value. 3. On October 1, ABC Company received$50,000 cash from a customer for services to be performed over the next 10 months. 4. On November 1, ABC Company paid $12,000 cash for a one-year insurance policy. 5. On December 1, ABC Company paid$10,000 of the amount owed for the equipment purchased on September 1. Calculate the amount of  net income that ABC Company would report in its 2009 income statement after all the above transactions are recorded and all necessary adjusting entries are made at December 31, 2009.

###### Problem Details

ABC Company began operations on August 1, 2009 and entered into the following transactions during 2009:

1. On August 1, ABC Company sold common stock to owners in the amount of $200,000 and borrowed$100,000 from the local bank on a 10-month, 12% note payable.

2. On September 1, ABC Company purchased a piece of equipment costing $80,000 by paying$20,000 in cash and agreeing to pay the remainder within six months. The equipment was assigned a 5-year life and a $5,000 residual value. 3. On October 1, ABC Company received$50,000 cash from a customer for services to be performed over the next 10 months.

4. On November 1, ABC Company paid $12,000 cash for a one-year insurance policy. 5. On December 1, ABC Company paid$10,000 of the amount owed for the equipment purchased on September 1.

Calculate the amount of  net income that ABC Company would report in its 2009 income statement after all the above transactions are recorded and all necessary adjusting entries are made at December 31, 2009.

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