Question

Prepare journal entries：

Jan. 1         Sold 5,000 shares of capital stock for a total of $500,000 cash.

Jan. 2         Paid the premium of $12,000 on a 24-month insurance policy on all assets.

Jan. 3         Purchased land and a building for a total of $350,000 cash. The land is valued at $50,000, while the building is valued at $300,000 and is expected to have a useful life of 30 years.

Jan. 10          Purchased a computer network system for $36,000 cash. The expected useful life is 6 years.

Jan. 15          Paid $2,400 cash for a phone system that should have a 3-year useful life.

Jan. 16          Paid cash to acquire equipment and furniture for business purposes at a cost of $12,000. The expected useful life is 4 years.

Jan. 19          Purchased office supplies for $1,250 cash. (Use the asset account “Office Supplies” for such purchases.)

Jan. 24          Paid cash of $10,000 for binders, manuals, and workbooks for use in Sheldon's client programs. Sheldon's policy is to initially record these materials as an asset (Program Supplies) and to then expense the materials used for a particular training program when the program is completed.

Jan. 30          Paid wages of $1,800 and salaries of $3,600 for work performed during January.

Feb. 14         Completed the first client program for a fee of $9,500. The customer paid $2,500 of the fee that day, with the remainder billed on account. Program supplies used on the project had originally cost Sheldon $1,500.

Feb. 15         Paid wages of $2,400 in cash.

Feb. 19         Paid utilities for the month of January of $1,050 in cash.

Feb. 23         Purchased on account 30 specialized manuals as program supplies for use in computer training for a total of $1,800.

Feb. 28         Borrowed $45,000 from the bank on a 2-year note. The interest rate on the note is 6% per year (or 0.5% per month).

Mar. 1       Paid wages of $3,600 and salaries of $6,000.

Mar. 1       Completed on-site computer training for two customers: JKL Products, Inc., and Watson Company. Billed JKL $11,000 on account. The fee for Watson was $9,200, half of which Watson paid in cash with the remainder on account. Program supplies used for the two customers totaled $4,600.

Mar. 4       Purchased additional program supplies on account for a total of $3,600.

Mar. 13        Collected $16,600 on account from credit customers.

Mar. 15        Completed first all-day computer workshop for walk-in customers. Sales totaled $4,250, all in cash. Program supplies used for the workshop originally cost Sheldon $1,850.

Mar. 16        Billed Coastal Corporation $7,500 for on-site training completed on March 16. Program supplies for the training originally cost Sheldon $2,500.

Mar. 16        Paid wages of $3,700.

Mar. 17        Purchased office supplies of $750 on account.

Mar. 21        Paid $3,200 to suppliers for materials previously purchased on account.

Mar. 23        Paid utilities for the month of February of $1,800 in cash.

Mar. 26        Received a $2,000 cash advance from Watson Company for additional computer training to begin April 1, 2018.

Mar. 29        Collected $6,250 on account from credit customers.

Mar. 31        Purchased $3,600 of program supplies for cash.

Additional Data Determined at March 31, 2018:

Unpaid and unrecorded wages and salaries totaled $2,700 and $8,500, respectively.

Service revenue unrecorded and unbilled at March 31 amounted to $9,300. Program supplies associated with these services originally cost Sheldon $2,800.

Office supplies on hand at March 31 totaled $450.

Sheldon uses straight-line depreciation on all depreciable assets and assumes the assets will have no value at the end of their estimated useful lives. A full month's depreciation is taken for the month of purchase, regardless of which day of the month the purchase is made. For example, depreciation expense for the three months ended March 31, 2018, on the phone system is $200 (i.e., $2,400/3 years x 3/12 of a year). Land is not considered depreciable. You may use a single account (Depreciation Expense) to record all of the depreciation expense for the depreciable assets. Also, you may use a single account (Accumulated Depreciation) to record the effect of depreciation on total assets.

Sheldon must record accrued interest for one month on the $45,000 bank loan.

Sheldon estimates utilities used during March amounted to $1,800, although the bill has not yet been received.

Remember insurance that has expired.

Answer 1

	Date	Transactions	Debit	Credit
	1-Jan	Cash	$500,000
		To Capital Stock		$500,000
		(Being capital stock issued for cash)
	2-Jan	Prepaid Insurance	$12,000
		To Cash		$12,000
		(Being insurance paid for 24 months)
	3-Jan	Land	$50,000
		Building	$300,000
		To Cash		$350,000
		(Being Land and Building purchased)
	10-Jan	Computer Network System	$36,000
		To Cash		$36,000
		(Being computer network system purchased)
	15-Jan	Phone System	$2,400
		To Cash		$2,400
		(Being phone system purchased)
	16-Jan	Equipment and Furniture	$12,000
		To Cash		$12,000
		(Being equipment and furniture purchased)
	19-Jan	Office Supplies	$1,250
		To Cash		$1,250
		(Being office supplies purchased for cash)
	24-Jan	Program Supplies	$10,000
		To Cash		$10,000
		(Being program supplies purchased)
	30-Jan	Wages Expense	$1,800
		Salaries Expense	$3,600
		To Cash		$5,400
		(Being wages and salaries paid)
	14-Feb	Cash	$2,500
		Accounts Receivable	7000
		To Service Revenue		$9,500
		(Being first client program complete)
	14-Feb	Program Supplies Expense	$1,500
		To Program Supplies		$1,500
		(Being program supplies expense recorded)
	15-Feb	Wages Expense	$2,400
		To Cash		$2,400
		(Being wages expense recorded)
	19-Feb	Utilities Expense	$1,050
		To Cash		$1,050
		(Being utilities expense incurred)
	23-Feb	Program Supplies	$1,800
		To Accounts Payable		$1,800
		(Being program supplies purchased on account)
	28-Feb	Cash	$45,000
		To 6% Note Payable		$45,000
		(Being 2 year note payable obtained)
	1-Mar	Wages Expense	$3,600
		Salaries Expense	$6,000
		To Cash		$9,600
		(Being wages and salaries paid)
	1-Mar	Accounts Receivable	15600
		Cash	4600
		To Service Revenue		20200
		(Being service revenue provided partly for cash and partly on account)
	1-Mar	Program Supplies Expense	$4,600
		To Program Supplies		$4,600
		(Being program supplies expense recorded)
	4-Mar	Program Supplies	$3,600
		To Accounts Payable		$3,600
		(Being program supplies purchased on account)
	13-Mar	Cash	$16,600
		To Accounts Receivable		$16,600
		(Being cash received on account from customers)
	15-Mar	Cash	$4,250
		To Service Revenue		$4,250
		(Being service revenue provided for cash)
	15-Mar	Supplies Program Expense	$1,850
		To Supplies Program		$1,850
		(Being Supplies Program expense recorded)
	16-Mar	Accounts Receivable	$7,500
		To Service Revenue		$7,500
		(Being service revenue provided on account)
	16-Mar	Supplies Program Expense	$2,500
		To Supplies Program		$2,500
		(Being Supplies Program expense recorded)
	16-Mar	Wages Expense	$3,700
		To Cash		$3,700
		(Being wages Expense paid)
	17-Mar	Office Supplies	$750
		To Accounts Payable		$750
		(Being office supplies purchased on account)
	21-Mar	Accounts Payable	$3,200
		To Cash		$3,200
		(Being paid to suppliers on account)
	23-Mar	Utilities Expense	$1,800
		To Cash		$1,800
		(Being utilities expense recorded)
	26-Mar	Cash	$2,000
		To Unearned Service Revenue		$2,000
		(Being advance received)
	29-Mar	Cash	$6,250
		To Accounts Receivable		$6,250
		(Being cash received from customers on account)
	31-Mar	Program Supplies	$3,600
		To Cash		$3,600
		(Being program supplies purchased)
	31-Mar	Wages Expense	$2,700
		Salaries Expense	$8,500
		To Wages and Salaries Payable		$11,200
		(Being wages and salaries accrued)
	31-Mar	Accounts Receivable	$9,300
		To Service Revenue		$9,300
		(Being service revenue unrecorded now recorded)
	31-Mar	Program Supplies Expense	$2,800
		To Program Supplies		$2,800
		(Being Program supplies expense recorded)
	31-Mar	Office Supplies Expense	$800
		To Office Supplies		$800
		(Being office supplies expense recorded)
	31-Mar	Depreciation Expense	$4,950
		To Accumulated Depreciation		$4,950
		(Being Depreciation recorded on fixed assets)
	31-Mar	Interest Expense	$225
		To interest Payable		$225
		(45000*0.50%)
		(Being Interest expense accrued)
	31-Mar	Utilities Expense	$1,800
		To Utilities Expense Payable		$1,800
		(Being utilities expense accrued)
	31-Mar	Insurance Expense	1500
		To Prepaid Insurance		1500
		(12000*3/24)
		(Being 3 months insurance expired Jan-Mar)
		Depreciation Workings
		Building (300000/30)*3/12		2500
		Computer Network System (36000/6*3/12)		1500
		Phone System (2400/3)*3/12		200
		Equipment and Furniture (12000/4)*3/12		750
		Total Depreciation		4950