Question

What are the Journal Entries for March thru December?

January

1. On January 1^st, The Board of Directors issued 250,000 additional shares (par of $.25) to raise capital for the New Year. Assume no change in price from Dec 31, 2018.

2. Purchased a truck for $240,000 cash on the 1^st of January. The truck will be depreciated over a 5 year period. You decide to use the 200% declining-balance depreciation method because it is determined that the truck will be more productive when it is newer. The truck has an estimated salvage value of $25,000.[Adjusting Entry Required]

3. Purchased new office equipment for $97,000 with cash from California Furniture on January 1, 2019. The new furniture will be depreciated over a ten-year period on a straight-line basis. The cabinet has an estimated salvage value of $5,000.[Adjusting Entry Required]

4. On January 1^st, a 5 year, $138,000 long-term note payable was taken from a local bank.

5. On January 5^th you receive payment from interest earned and accrued in 2018.

6. On January 22^nd you purchased 8,500 additional units of inventory at a cost of $76.50 per unit. You paid 45% in cash and purchased the remainder on account.

7. On January 25^th you pay $289,000 cash toward your accounts payable.

February

8. Paid cash for $52,300 worth of radio advertising on February 1^st. This gives you radio advertising space until January 31^st, 2020.[Adjusting Entry Required]

9. February 13^th you collect $356,000 of account payments from customers.

March

10. Purchased a parcel of land on March 1, 2019 for $990,000 by paying $480,000 in cash and signing a short-term note payable with the seller for $510,000. You must repay the $510,000 in exactly one year on March 1, 2020. You agree to pay the seller 5 percent interest (annual rate) on a quarterly basis (June 1, September 1, December 1, 2019, and March 1, 2020).[Adjusting Entry Required]

11. On March 19^th you purchased $29,000 of office supplies from Super Office Supplies with cash.

12. On March 20^th you received a payment of $41,000 for 200 hours of service to be performed in the future.

April

13. April 21^st, your customers bought 15,000 units of your product for $122 per unit (you decide what your company sells). The cost of this product is determined by the method of inventory valuation used by your company. Customers paid you 60% in cash and the remainder was on account.

14. On April 27^nd you purchased 9,250 units at a cost of $78.5 per unit. You paid 65% in cash and purchased the remainder on account.

15. On April 29^th you pay $546,000 cash toward your accounts payable.

May

16. On May 1^st you pay all dividends owed to your owners.

June

17. Leased additional warehouse space from Leasing Solutions for two years on June 1^st due to expiration of the previous rental contract. $105,000 cash was paid for the new contract on this date which covers the rental fee for two years. There is no value left in the previous contract. [Adjusting Entry Required]

18. Wage expenses from January 1 – June 30 are $506,000. Pay this in full including your beginning balance in wages payable.

19. On June 19^th, $134,000 of prepaid insurance was used.

20. On June 26^th a customer that previously bought your product on account has filed for bankruptcy. He owed you $47,500. You expect to collect $0.

July

21. Your company issued 1,000, 2.9% bonds (face value of each bond is $1,000) at 96.8229 on July 1^st, 2019. The bonds are due on July 1, 2024, with interest payable each January 1 and July 1. The market rate at the time of the bond issuance was 3.6 Percent. Use the effective-interest method to calculate both the interest expense and the amortization of the bond discount when each interest payment is made.[Adjusting Entry Required]

August

22. Purchased a Patent (Intangible Asset) for $97,000 on August 1^st. The patent will be amortized over a 10 year period on a straight-line basis.[Adjusting Entry Required]

23. On August 6^th, a piece of land that was originally purchased for $1,150,000 was sold for $2,000,000 cash.

24. August 15^th, your customers bought 9,000 units of your product at $128 per unit. The cost of this product is determined by the method of inventory valuation used by your company. Customers paid you 60% in cash and the remainder was on account.

25. Received on August 25^th a $164,000 cash payment from a customer paying on their account.

September

26. $49,000 cash was paid for an investment in Company X's marketable securities on September 3^rd.   

27. On September 12^th, a piece of equipment was sold for $760,000 cash. The equipment was originally purchased for $530,000. At the time of the sale, it had been depreciated by $75,000.

28. Purchased and used $11,900 worth of fuel for the delivery truck on September 18^th.

October

29. Your top sales officer met with a new customer to discuss a potential future contract. She informs you that the customer is considering signing the $280,000 deal, which would become effective February 2020.

30. On October 1^st, you purchased 11,250 units at the increased price of $80 per unit. The purchase was made on account.

31. On October 10^th you paid your supplier $95,000 cash for inventory purchased on account.

November

32. November 1^st, the CEO, in an effort to adjust ratios, ordered the repurchasing of the company’s own stock. The quantity of stock repurchased was 150,000 shares.

33. Purchased a two-year building insurance policy on November 1^st for $391,000 cash.[Adjusting Entry Required]

34. On November 17^th a customer pays you $736,000 for work that you will finish in January of 2020.

35. November 19^th, your customers bought 8,650 units of your product at $136 per unit. The cost of this product is determined by the method of inventory valuation used by your company. Customers paid you 45% in cash and the remainder was on account.

36. An employment contract is signed with a new regional manager. You have offered him $190,000 per year. He will not begin working for the company until March 2020.

December

37. Wages earned from July 1^st through December 31^st was $552,000. Wages earned between Dec. 15^thand Dec 31^st amounting to $34,000 was not paid this until Jan 7th.

38. At the end of the year, $54,000 cash was paid to the local bank for the long-term note payable taken out on January 1, 2019. $46,000 of this was applied to the loan principal. The remaining amount was the accumulated interest due for 2019.

39. On December 31^st, the marketable (trading) securities you purchased on September 3, 2019 transaction now has a fair market value of $35,000.

40. On December 31^st, $579,000 depreciation expense for the year was calculated for equipment purchased before January 1, 2019.

41. On December 31^st, you declare dividends of $.24 per share to be paid at a later date.

42. On December 31^st, the utility bill was paid for the year. The amount was $54,000 and you paid in cash.

43. On December 31^st, you pay in cash recurring interest on the long-term note acquired prior to the year 2017. HINT: See prior year financial statements.

44. On December 31^st, your company earned interest on the average 2019 cash balance which will be paid January 5^th, 2020. The average interest rate for the year was 4.0%. Note: Compute the average cash using only the beginning and ending balance.

45. By December 31^st, 147 of the prepaid service hours from March 20, 2019 were completed.

46. A count of office supplies indicated that $26,800 of office supplies had been used by December 31^st.

47. Since the inception of your company, you have been able to collect 89% of your ending accounts receivable balance from customers that bought your product on account. Based on this information, adjust your allowance for bad debt account. NOTE: Use your 2019 ending accounts receivable balance to make this calculation

Answer 1

Journal Entries

S.No	General Journal	Post Ref	Debit In $	Credit In $
Mar (10)	Land		990,000
	Cash			480,000
	Note Payable, current			510,000
	(parcel of land Purchased by paying cash and signing short-term note payable)
Mar (11)	Office Supplies		29,000
	Cash			29,000
	(Office supplies purchased in cash)
Mar (12)	Cash		41,000
	Unearned Revenue			41,000
	(Cash received for service to be performed in future)
Apr (13)	Cash		1,098,000
	Accounts Receivable		732,000
	Sales Revenue			1,830,000
	(Sale made on 60% cash and remaining on account See W.N 1)
Apr (14)	Inventory		726,125
	Accounts Payable			254,143.75
	Cash			471,981.25
	(Purchased 65% on cash and remaining on account See W.N 2)
Apr (15)	Accounts Payable		546,000
	Cash			546,000
	(Cash paid towards Accounts Payable)
June (ADJ)	Interest Expense		6,375
	Cash			6,375
	(Quarterly interest paid on Short term notes See W.N.3)
June (17)	Prepaid Rent		105,000
	Cash			105,000
	(Leased rent for 2 years paid in advance)
June (18)	Wage Payable		XXXX
	Wage Expenses		506,000
	Cash			XXXX
	(Wage Expenses and wage payable paid in full Note: For wage payable previous year financial statement required which is missing And cash is total of wage expense and wage payable)
June (19)	Insurance Expense		134,000
	To Prepaid Insurance			134,000
	(Prepaid Insurance used)
June (20)	Allowance for doubtful debts		47,500
	Accounts Receivable			47,500
	(Customer filed for bankruptcy expected to recover nil)
July (1)	Cash		96,822.90
	Bonds Payable			96,822.90
	(Bonds Issued 1,000 @ 96.8229)
August (22)	Patent		97,000
	Cash			97,000
	(Patent purchased)
August (23)	Cash		2,000,000
	Land			1,150,000
	Gain on sale of land			850,000
	(Land sold on profit)
August (24)	Cash		691,200
	Accounts Receivable		460,800
	Sales Revenue			1,152,000
	(Sale made on 60% cash and remaining on account See W.N 4)
August (25)	Accounts Receivable		164,000
	Cash			164,000
	(Cash Received from customer)
September
ADJ	Interest Expense		6,375
	Cash			6,375
	(Quarterly interest paid on Short term notes See W.N.3)
26	Investment in Marketable securities		49,000
	Cash			49,000
	(Investment made in company X’s marketable securities)
27	Cash		760,000
	Accumulated Depreciation on equipment		75,000
	Equipment			530,000
	Gain on sale of land			305,000
	( Equipment sold on profit)
28	Oil Expense		11,900
	Cash			11,900
	(Petrol purchased and used)
October
29	No General Journal required
30	Inventory		9,00,000
	Accounts Payable			9,00,000
	(11,250 Inventory purchased @ 80 per unit)
31	Accounts Payable		95,000
	Cash			95,000
	(Cash paid to supplier)
November
32	Cash		3,750,000
	Treasury stock			3,750,000
	(CEO purchased 150,000 own stock. In the absence of financial statement it is assumed that price of share issued on Jan 1 is $25 per share)
33	Prepaid Insurance		391,000
	Cash			391,000
	(Purchased a two-year building insurance policy on November 1st for $391,000 cash)
34	Cash		736,000
	Unearned revenue			736,000
	(customer pays you $736,000 for work that you will finish in January of 2020.)
35.	Cash		529,380
	Accounts Receivable		647,020
	Sales Revenue			1,176,400
	(Sale made on 45% cash and remaining on account See W.N 5)
36.	No general Journal required
37.	Wage Expenses		552,00
	Wage Payable			552,000
	(Wage Earned from July to December)
	Wage Payable (552,000-34,000)		518,000
	Cash			518,000
	(Wages Paid Except $34,000)
38	Long term notes payable		46,000
	Interest expense		8,000
	Cash			54,000
	($54,000 cash was paid to the local bank for the long-term note payable taken out on January 1, 2019. $46,000 of this was applied to the loan principal. The remaining amount was the accumulated interest due for 2019.)
39	Fair value adjustment of Marketable securities		5,000
	Unrealized on marketable securities			5,000
	(Bring securities at fair value)
ADJ	Interest Expense		6,375
	Cash			6,375
	(Quarterly interest paid on Short term notes See W.N.3)
40	Depreciation Expenses on equipment		579,000
	Accumulated Depreciation on equipment			579,000
	($579,000 depreciation expense for the year was calculated for equipment purchased before January 1, 2019)
41	Dividends
	Dividend Payable
	(declare dividends of $.24 per share to be paid at a later date) Note: For figures required the number of shares outstanding)
42	Utilities Expense		54,000
	Cash			54,000
	(utility bill was paid for the year)
43	Interest Expense
	Cash
	(for figures Prior year financial statement require)
44	Cash
	Interest Revenue
	(for figures Prior year financial statement require)
45	Unearned Revenue		30,135
	Service Revenue			30,135
	(147 of the prepaid service hours from March 20, 2019 were completed) 41,000*147/200
46.	Office supplies expenses		26,800
	Office Supplies			26,800
	(office supplies had been used)
47.	Allowance of bad debts
	Accounts Receivable
	( for figures 2019 ending accounts receivable balance required)
	Adjustment Entries
	Depreciation on truck		86,000
	Accumulated depreciation on truck			86,000
	(240,000-25,000)/5*200%
	Depreciation on equipment		9,200
	Accumulated depreciation on equipment			9,200
	(97000-5000)/10

Working Notes:

1. total unit sold = 15,000

      Price per unit = $122

      Total Price of unit sold = 15,000*122

      = $1,830,000

   Cash 60% of sale price: 1,830,000*60%

     = $1,098,000

     On Account = 1,830,000-1,098,000

    = $732,000

2. Total unit purchased= 9,250

    Purchase price per unit = $78.5

    Total purchase price = 9,250*78.5

    = $726,125

    Cash 65% of purchase price = 726,125*65%

    = $471,981.25

    On Account = 726,125-471,981.25

   = $254,143.75

3. Interest Due on June 1, September 1, December 1, 2019 and March 1, 2020

    Total Interest = 510,000*5%

     = $25,500

    Interest Per quarter = 25,500/4

    = $6,375

4. Total unit sold = 9,000

      Price per unit = $128

      Total Price of unit sold = 9,000*128

      = $1,152,000

   Cash 60% of sale price: 1,152,000*60%

     = $691,200

     On Account = 1,152,000-691,200

    = $460,800

5. Total unit sold = 8,650

      Price per unit = $136

      Total Price of unit sold = 8,650*136

      = $1,176,400

   Cash 60% of sale price: 1,176,400*45%

     = $529,380

     On Account = 1,176,400-529,380

    = $647,020