Question

In: Accounting

Record entries from the transaction and event list provided below in proper journal entry format. NOTE:...

  1. Record entries from the transaction and event list provided below in proper journal entry format. NOTE: You are recording entries for the fiscal year 2019 (Jan 1 – Dec 31) and make adjusting entries at year-end. This list must be chronologically organized. Make sure that I can easily identify the journal entry or adjusting journal entry with the related transaction/event. Show your work if the entry requires you to make a calculation (i.e. depreciation, interest expense, etc.).

January

  1. On January 1st, the company issued 280,000 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 $140,000 cash on the 1st of January. The truck will be depreciated over an 8 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 $8,000.

    [Adjusting Entry Required]

  3. On January 1st, a 5 year, $130,000 long-term note payable was taken from a local bank.

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

  5. On January 22nd you purchased 8,500 additional units of inventory at a cost of $63.00 per unit. You paid 45% in cash and purchased the remainder on account.

  6. On January 25th you pay $112,000 cash toward your accounts payable.

  7. Purchased new office equipment for $230,000 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 $15,000.
    [Adjusting Entry Required]

February

  1. Paid cash for $160,000 worth of radio advertising on February 1st. This gives you radio advertising until January 31st, 2020.
    [Adjusting Entry Required]

  2. February 13th you collect $365,000 of account payments from customers.

Solutions

Expert Solution

Journal Entries
Date Particulars Debit Credit
1-Jan Cash $   70,000.00
To Common stock $   70,000.00
(280000 x $ 0.25)
1-Jan Truck $ 140,000.00
To Cash $ 140,000.00
1-Jan Office Equipment $ 230,000.00
To Cash $ 230,000.00
1-Jan Cash $ 130,000.00
To Notes Payable $ 130,000.00
5-Jan Cash
To Interest Receivable
(Note)
22-Jan Inventory $ 535,500.00 (8500 x $ 63)
To Cash $ 240,975.00 ($ 535500 x 45%)
To Accounts Payable $ 294,525.00 (bal. fig)
25-Jan Accounts Payable $ 112,000.00
To Cash $ 112,000.00
1-Feb Prepaid Advertising $ 160,000.00
To Cash $ 160,000.00
13-Feb Cash $ 365,000.00
To Accounts Receivable $ 365,000.00
Adjusting Entries
Date Particulars Debit Credit
31-Dec Depreciation on Truck $   35,000.00
To Accumulated Depreciation $   35,000.00
[(100% / 8 years) x 200% x $ 140000]
31-Dec Depreciation on Equipment $   21,500.00
To Accumulated Depreciation $   21,500.00
[($ 230000 - $ 15000) / 10 years]
31-Dec Advertisement Expense $ 146,666.67
To Prepaid Advertising $ 146,666.67
($ 160000 x 11/12)
Note:
No information regarding Interest Receivable has been provided, though the
entry would be this only.

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