Question

Complete the following journal Entries:

3/1/20X1 Gotham needs cash and issues a $100,000, 5-year, 5% coupon bond when market rates are 6%.

3/3/20X1 Gotham purchases 500 T-shirts from its supplies for $2.50/each on credit.

3/6/20X1 Gotham makes another sale! Gotham Sells 601 shirts for $35/each on credit.

3/9/20X1 Legal Experts Inc. is hired by Gotham to perform legal services that might come up during the year. Gotham signs a contract to use Legal Experts. Estimated legal costs for the year are $2,500.

3/15/20X1 Gotham receives $25,000 cash from its customers from previous purchases.

3/19/20X1 Gotham makes another sale! Gotham sells 50 shirts for $40/each for cash.

3/25/20X1 It's payday for Gotham's employees. The total wages is $2,500 and is paid in cash immediately.

3/31/20X1 Gotham records interest related to the bank loan and pays the bank all interest owed as of 3/31.

3/31/20X1 Gotham records depreciation for the month of March related to the Building. Later in the day, Gotham sells the building for $55,000 cash.

It's the end of the month of March for Gotham. What adjustments need to be made?

Another Information: Interest should be calculated as 2% of all outstanding loans at the end of the month (this is not an annual rate -- it's the monthly rate) Interest is paid at the end of March. There are $1,000 in supplies remaining at the end of March.

Answer 1

JOURNAL ENTRIES FOR GOTHAM (MARCH)

DATE	ACCOUNT NAME	DR.	CR.
3/1/20X1	Cash Account	$100000
	5% Coupon Bond Account		$100000
	(cash received by issuing bonds)
3/3/20X1	Purchase Account	$1250
	Supplier Account		$1250
	(500 T-shirts purchased from supplier on credit @$2.5 each)
3/6/20X1	Customer Account	$21035
	Sales Account		$21035
	(601 T-shirts sold to customer on credit @$35 each)
3/9/20X1	Legal Costs Account	$2500
	Legal Cost Payable Account		$2500
	(Fees for Legal expenses outstanding)
3/15/20X1	Cash Account	$25000
	Customer Account		$25000
	(Customer pays cash for earlier sales)
3/19/20X1	Cash Account	$2000
	Sales Account		$2000
	(50 Shirts sold @40 each for cash)
3/25/20X1	Wages Account	$2500
	Cash Account		$2500
	(Wages paid in cash)
3/31/20X1	Interest on loan Account	-
	Cash Account		-
	(Interest @2% per month or 24% per annum paid in cash. Information regarding amount of bank loan not available. So amount of interest calculation not possible)
3/31/20X1	Statement of Profit & Loss	-
	Interest on loan Account		-
	(Interest Paid transferred to Statement of Profit & Loss. Amount not calculated as explained in previous entry)
3/31/20X1	Depreciation Account	-
	Building Account		-
	(Depreciation on building recorded. Information regarding amount and rate not given)
3/31/20X1	Statement of Profit & Loss	-
	Depreciation Account		-
	(amount of depreciation transferred to Statement of Profit & Loss. Amount information not given)
3/31/20X1	Cash Account	$55000
	Building Account		$55000
	(Building sold for cash)
3/31/20X1	Interest on 5% Coupon Bond	$2500
	5% Coupon Bond Account		$2500
	(Interest payable on 5% Coupon Bond assumed paid semi-annually)
3/31/20X1	5% Coupon Bond Account	$2500
	Cash Account		$2500
	(Interest paid in cash)
3/31/20X1	Statement of Profit & Loss	$2500
	Interest on 5% Coupon Bond		$2500
	(Amount of Interest transferred to Statement of Profit & Loss)
3/31/20X1	Closing Inventory	$1000
	Cost of goods sold		$1000
	(Inventory at the period end recorded)