PS03 Accounting Assignment Questions

Question 1: The DEF Company

The DEF Company started its operations in 2018. The balance sheet for December 31, 2018, showed the following account balances (there were no other accounts listed):
Accounts receivables 45, Advances from customers 40, Accumulated depreciation 10, Paid in capital 500, Retained earnings 57, Property plant and equipment (gross) 200, Inventory 75, Accounts payable 40, Cash 309, Prepaid rent (?).
During 2019 the following transactions occurred:
1. DEF purchased $375 worth of inventory on account.
2. Payments on Accounts payable were $365.
3. Cash sales were $260; credit sales were $360.
4. Ending inventory was $59.
5. Depreciation expense was $20.
6. Collections from customers (not including cash sales) were $312.
7. The Prepaid rent had expired during the year.
8. DEF hired one employee, who worked for the entire year at $4 per month. At the end of the year DEF owes its employee $6.
9. Dividend of $24 was declared and paid during 2019.
10. On the last day of the year, DEF gave a loan of $50 to its twin sister company, ABC.
Advances from customers account remained intact during 2019.
Required:
a. What was the balance of the Prepaid rent account on December 31, 2018?
b. Record the entries for all the transactions that occurred during 2019. You can either use journal entries or the accounting equation to record the transactions.
c. Prepare an Income Statement for the year ended December 31, 2019.
Prepare a Balance Sheet for December 31, 2019.
Prepare a Statement of Cash Flows for the year ended December 31, 2019. (This subpart is optional if the topic of Cash Flow Statements has not been completed in class).