Gordon Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the following three transactions:

a. During the year, the company purchased office supplies that cost $3,000. At the end of the year, office supplies of $800 remained on hand.
b. On January 1 of the current year, the company purchased a special machine for cash at a cost of $25,000. The machine’s cost is estimated to depreciate at $2,500 per year.
c. On July 1, the company paid cash of $1,000 for a two-year premium on an insurance policy on the machine; coverage began on July 1 of the current year.

Required: Complete the following schedule with the amounts that should be reported for the current year.

The declaration of financial accounts, for a period of time, regarding revenues and expenses resulting from and as a consequence of business transactions, is related to as the declaration of income.

Balance sheet:

The financial statement lists the capital and statements of a business's shareholders and equity holders on those properties. The Company's capital include the funds of the owners and creditors. Therefore, properties, liabilities and equities are the main components of the balance sheet.

Step 2

Fill the calendar with the following numbers for the year in question:

Selected balance sheet accounts at Dec 31st Amount to be reported

Assets:

Equipment $25,000

Less: Accumulated depreciation $2.500

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Net book value of equipment 22,500

Office supplies $800

Prepaid insurance ($1000-$250) $750

Prepaid Insurance

Amount of prepaid insurance expired =$ 1000 x 6/24

=$ 250.00

Remaining amount in prepaid insurance =$ 1000 - $ 250

=$ 750.00

Income Statement

Depreciation Expense $ 2,500.00

Supplies Expense $ 2,200.00($ 3000 - $ 800)

Insurance Expense $ 250.00