Question

Marmidan Mold Shop Inc. designs and builds molds for the automotive and aircraft industries. The account balances in the company’s general ledger on January 1, 2020 (first day of the new annual fiscal year) were as follows (all account balances are in their normal position):

Cash                                                                    $     3,700

Accounts receivable                                                   5,900

Supplies inventory                                                    29,300

Land                                                                        168,500  

Buildings                                                                 116,500

Accumulated depreciation, buildings                       37,500   

Equipment                                                                 58,500

Accumulated depreciation, equipment                     18,000

Accounts payable                                                      25,200

Income tax payable                                                   16,600

Interest payable                                                           4,200

Wages payable (due in 2020)                                    15,700                                         

9% Notes payable ($10,000 due June 30, 2021,

     balance due June 30, 2022)                                  61,500

Common shares                                                       151,500

Retained earnings, Dec. 31, 2019                              52,200         

Transactions during 2020:

1.The company provided sales services to customers, on credit, for $ 210,300. In addition, the company produced cash sales to customers of $ 62,300.

2.Accounts receivable from customers of $ 15,600 remains to be collected at December 31, 2020.

3.Inventory of $ 62,900 was purchased on credit and debited to the supplies inventory account.

4.Minor parts were purchased with cash for $ 7,400 and debited to the supplies inventory account.

5.Wages payable at the beginning of 2020 were paid early in 2020. In addition, wages were earned by employees and paid during 2020 in the amount of $ 112,000.

6.Income tax payable at the beginning of 2020 was paid early in 2020.

7.Payments of $ 73,000 were made to creditors for supplies previously purchased on credit.

8.One year’s interest at 9% was paid on the notes payable at July 1, 2020.

9. During 2020, Don Tallint, the principal shareholder, purchased a new car for his wife

    Debbie. The new car cost $ 45,000 and was paid for with cash from personal sources.

10.Property taxes were paid on the land and buildings in the amount of $ 17,000 with cash.

11.Dividends were declared and paid in cash in the amount of $ 7,200.

Information available for year end adjusting entries:

12.•Supplies inventory was counted on December 31, 2020 and it was determined the supplies inventory still on hand at yearend was $ 31,900.

13. •Annual depreciation on the buildings is $ 6,000.

14•Annual deprecation on the equipment is $ 5,500

15•Additional wages of $4,000 were earned but are unpaid and unrecorded at December 31, 2020.

16•Interest for six months at 9% per year on the notes payable is unpaid and unrecorded at December 31, 2020..

17•Income taxes of $ 16,500 were unpaid and unrecorded at December 31, 2020.

Q: please Record beginning 2020 beginning balances in T accounts. Prepare journal entries for transactions 1 to 11 above as required and record the journal entries in T accounts while adding any new T accounts that you need as you complete this task.

Answer 1

Journal entries for 1 to 11

Date	Particulars	Debit	Credit
1)	Customer A/c Cash A/c Sales A/c (goods sold on credit and cash)	210300 62300	272600
2)	Customer A/c Accounts receivable A/c (Accounts receivables are yet to be received)	15600	15600
3)	Supplies Inventory A/c Creditors A/c (Inventory purchased on credit)	62900	62900
4)	Supplies inventory A/c Cash A/c (minor parts purchased)	7400	7400
5)	Cash A/c Wages payble A/c (15700+112000) (Wages payble paid in cash)	127700	127700
6)	Cash A/c Income tax payble A/c (income tax paid)	16600	16600
7)	Cash A/c Creditors A/c (cash paid to creditors)	73000	73000
8)	Cash A/c    Interest on notes payble A/c (interest paid on notes payble)	5535	5535
9)	no entry will come as shareholder of company paid the expenses from personal resources. as per business entity principle, business and individual considered as seperate entity.
10)	Cash A/c Property tax A/c (Property tax is paid in cash)	17000	17000
11)	Cash A/c Dividend A/c (dividend declared and paid in cash)	7200	7200

T- Accounts

With the help given balances and above journal entries and given adjusting entries T- accounts can be constructed.

Due to time constraints main accounts will be provided.

Cash A/c

Date	Particulars	Debit Amount	Date	Particulars	Credit amount
	opening balance	3700	4)	Supplies inventory	7400
1)	Sales A/c	62300	5)	Wages Payable	127700
	Balance c/d	195835	6)	income Tax payable	16600
			7)	Creditors	73000
			8)	Interest on notes payable	5535
			10)	Property tax	17000
			11)	Dividend	7200
		258135			258135

Income tax A/c

Date	Particulars	Debit Amount	Date	Particulars	Credit amount
	Income tax payable (adjustment entry)	16500		Cash	16600
	balance c/d	100
		16600			16600

Interest Alc

Date	Particulars	Debit Amount	Date	Particulars	Credit amount
	interest payable	4200		Cash	5535
	interest payable (as in adjustment interest of 6 months is unpaid)	2767.5		balance c/d	1432.5
		6967.5			6967.5

Similarly all t accounts can be constructed as above.

In journal entries whenever cash goes out it always comes in debit and whenever cash comes it will be credit.

But in t account whenever cash comes in it will be entered in credit side and expenses are entered in debit side.