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EyeCandy is a retailer of eyewear in Illinois. It also provides service to repair glasses and goggles. It started its business from October 1, 2005. It has the following transactions during 2005:

1. On Oct 1, EyeCandy issued 20,000 shares of common stock for $600,000. The par value per share is $1. 2. On Oct 1, EyeCandy got a $10,000 from PNCBank as a two-year note. The annual interest rate of that note is 5%, and the first interest payment is due on September 30, 2006. 3. EyeCandy rents a store from Franklin West from Oct 1, 2005. EyeCandy paid $12,000 to Franklin West on Oct 1 for the next year’s rent. 4. On Oct 1, EyeCandy purchased store furniture and fixture for $40,000. Depreciation for these furniture and fixture each year is $4,000. 5. On Oct 15, EyeCandy purchased $50,000 sunglasses, it paid $30,000 in cash, and the remaining balance is due on Jan 15, 2006. 6. EyeCandy pays its employees every month on the last day. For example, the October salary is paid on Oct 31. The payroll for each month is $3,000. 7. On November 25, EyeCandy sold all of its sunglasses inventory during the Thanksgiving sale for $80,000. EyeCandy received $40,000 in cash and remaining balance is due in two months. 8. On November 30, EyeCandy repaired a customer’s glasses and billed $100. The customer promised to pay within 1 month. 9. On December 15, EyeCandy declared $2,000 dividends to its shareholders. The dividends will be distributed to shareholders on January 5, 2006. 10. On December 28, the customer paid $100 for EyeCandy’s previous repair service.

a. Make journal entries for the above transactions. b. Make adjusting entries at the end of 2005. c. What is the Net Income for the year 2005 ? d. Compose the 2005 Balance Sheet e. Show closing entries for the company’s revenue accounts.

Answers:
a.
1.…...

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