Question

Misc Information: Mr. Burns sold off all of his fixed assets from the nuclear power plant. Also, there was an adjustment to the allowance for uncollectible account during your brief respite. Mr. Smithers performed the necessary entries to get the books up to date; this included the reduction of the mortgage payable. However, you will calculate interest expense, bad debt expense, and depreciation expense. These amounts will not be given to you. Good luck and time manage appropriately. ***For any note/mortgage payable, you find interest expense the same way you find interest revenue. ***

Check Figures:

                        Unadjusted Net Loss: ($9,737)

                        Adjusted Net Loss: ($360,991)

Journal Entries:

1. January 2: After returning from exile, Mr. Burns invested $600,000 of personal funds directly in the business (retained earnings) to strengthen his grip on the cookie market. No common stock ownership was given.

2. January 3: In order to keep the IRS off his trail, Mr. Burns transferred money from his personal account into a Cayman Island secret account for $1,000,000.

3. January 3: In order to expand his cookie factory and be able to dump toxic waste without being impeded by the Feds, Mr. Burns bought land for cash for $500,000. The bald children in the park were drawing attention from the Environmental Protection Agency.

4. January 4: After threatening to block out the sun, Mr. Burns was able to collect $115,000 of the 2020 accounts receivable beginning balance.

5. January 5: In order to ease his beginning of the year cash flow crunch, Mr. Burns issued Common Stock (1,500,000 shares at $2.00 per share). The Par Value is $1.00 per share.

6. February 1: In order to keep up with being 104 year old hip evil billionaire, Mr. Burns decided to purchase a new truck. The truck cost $60,000. Mr. Burns put a down payment on the truck of $10,000 and took out a note for the rest (long term). The interest rate of the note is 10%. The truck will depreciated by miles. The expected life of the truck is 100,000 miles.

7. February 20: Mr. Burns sold his delicious cookies to Candy Store on account $300,000. Mr. Burns offered terms 2/20, n40. The cost of merchandise sold was $150,000.

8. February 28: Mr. Burns bought cookie dough (inventory) to keep the cookie assembly line going. Mr. Burns paid cash for the cookie dough $400,000

9. March 1^st. Mr. Burns reclassed the current portion of long term notes payable. Reclass only the portion on the balance sheet as of January 1st, 2020.

10. March 5: Mr. Burns paid for the following expenses that came in: Sales Salary Expense $70,000, Advertising Expense $50,000, and Delivery Expense $40,000. All of the expenses were paid in one transaction.

11. March 6: Mr. Burns collected $30,000 of the 1/1/2020 balance of the note receivable from Mayor Quimby. The interest rate was 15% and the Note was written on July 1^th, 2019

12. March 7: The Candy Store paid Mr. Burns what they owed him on account.

13. March 15: Mr. Burns paid income tax payable owed from last year.

Answer 1

Journal Entries

Date	Account Titles and Explanation	Debit ($)	Credit ($)
January 2	Cash	600000
	Mr Burn's Capital		600000
	(To record Capital brought into business)
January 3	Land	500000
	Cash		500000
	(To record purchase of land)
January 4	Cash	115000
	Accounts receivable		115000
	(To record payment recovered from debtors)
January 5	Cash (15.00,000 shares * $2 per share)	3000000
	Share Capital (15.00,000 shares * $1 per share)		1500000
	Securities Premium(15.00,000 shares * $1 per share)		1500000
	(To record issue of shares at premium)
February 1	Truck	60000
	cash		10000
	Accounts Payable		50000
	(To record purchase of truck partly by cash and partly on credit )
February 20	Candy stores	300000
	Inventory		150000
	Profit on sale		150000
	(To record the sale of cookies for profit on credit)
February 28	Inventory((Cookie Dough)	400000
	Cash		400000
	(To record the purchase of Cookie Dough )
March 5	Sales Salary expenses	70000
	Advertising Expense	50000
	Delivery Expenses	40000
	Cash		160000
	(To record the expenses made by cash)
March 6	Cash	30000
	Accounts Receivable		30000
	(To record the payment received from Mayor Quimby)
March 7	Cash	300000
	Candy Store		300000
	(To record the due cleared by candy Store)
March 15	Income tax payable	xxxxxx
	Cash		xxxxx
	(To record the payment of income tax )

Note :

1. No entry is made for the first  transaction on January 3rd as the payment is made from personal funds of Mr Burns.
2. No journal entry is passed for this transaction on March 1st as there is no monetary transaction involved
3. The amount for the income tax payment made on March 15 th is taken as xxx as the amount paid is not mentioned in the question