CHAPTER 4

Case Study 1—Applying the Major Adjustments

The following is a balance sheet for Tango Inc. at the end of its first year of trading:

Tango Inc.Balance Sheetat December 31, 2015

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During 2016, the following transactions took place:

 

1.The owners withdrew equity in the form of cash of $40,000.

2.Premises continued to be rented at an annual rental of $40,000. During the year, rent of $30,000 was paid.

3.Insurance on the premises was paid during the year as follows: for the period April 1, 2016 to March 31, 2017 for $2,600

4.A second piece of plant and equipment was bought on January 1, 2016 for $26,000. This is expected to be used in the ...

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