ACCT 123 Breaking Bad Company (“BBC”)

	Breaking Bad Company (“BBC”)
Date
March 1, 2013	On March 1 started business by funding with $ 1,000,000. cash in exchange for 100,000 shares of no par common stock
March 31, 2013	Paid $12,000. for an annual insurance policy that commence as of April 1, 2013
March 31, 2013	Purchase Office Equipment for $25,000. by issuing a three year 12% Note. First interest payment is due January 1 and semi-annually thereafter with the entire principal due at maturity
June 30, 2013	Purchased land valued at 75,000 together with the building for a total of $ 225,000 paid for with $ 25,000 a cash down payment of and by obtaining a mortgage, bearing interest at 7 % per annum for the balance. Interest is payable semi annualy except for the first payment which is due on January 1. The the entire principal due at maturity.
September 1, 2013	Opened an account with Dewey, Cheatem and Howe to purchase goods for resale On September 1 purchased $ 300,000. of Breaking Bad Blue for resale Terms 1/2 due in Net 90 days and the balance due in 135 days which BBC paid within the terms
September 30, 2013	On September 30 paid $ 20,000 for rent the next six months
September 30, 2013	Sold and delivered $ 200,000 of Breaking Bad Blue on Account to ABC Co. with a gross margin/gross profit of 50%
October 1, 2013	Hire 2 employees for an annual salary of 24,000; per year, per employee. The employees are paid monthly on the first day of the following month in which the services were rendered.
October 15, 2013	Purchased office supplies of $ 5,000
November 15, 2013	ABC Co. pays the balance due on its account
November 30, 2013	Sold and delivered $ 100,000 of Breaking Bad Blue on Account to XYZ Co. with a gross margin/gross profit of 50%
December 31, 2013	BBC received a deposit of $ 125,000 for goods to be manufactured and delivered in January 2014 From DEF Corp
January 1, 2014	The Bank paid interest on the cash held in accounts of $ 5,000. for the year ended December 31, 2013
Additional Information
The company uses a prepetual inventory system
The office equipment has an estimated useful life of 5 years with no salvage value.
The building has an estimated useful life of 20 years and a salvage value of $ 50,000
The ending supplies inventory is $ 2,000
BBC’s is a calendar year company whose income tax rate is 50% and is payable on April 15th 2014
The company takes a physical inventory and records any adjustments necessary at the end of the year
The company uses 5% of outstanding AR as a general reserve for bad debts
	REQUIRED
	Go through the accounting cycle for the nine months ending December 31, 2013:
1	Record gerneral journal entries for all of the transactions in the table.
2	Record all necessary adjusting entries.
3	Prepare a worksheet with columns for the unadjusted trial balance, adjusting entries, adjusted trial balance, income statement and balance sheet.
4	Record the closing entries.
5	Prepare an income statement (including EPS), balance sheet and statement of changes in retained earnings.