Question

Journal Entries

Jan 1 Equipment with a historical cost of $10,000 and an accumulated depreciation of $3,000 was sold for $6,000

Jan   2 Equipment with a historical cost of $20,000 and an accumulated depreciation of $18,000 was disposed of with an additional disposal cost of $1,300.

Jan   2 Sanford Company borrowed $24,000 on a short-term discounted 90 day, 3.0% noninterest-bearing note payable.

Jan 3 Sanford Company paid $18,000 in advance for the 6 month rental of a warehouse.

Jan 3 Equipment with a historical cost of $50,000 and an accumulated depreciation of $35,000 was traded for new similar equipment valued at $75,000. Sanford Company received $14,500 as a trade in for the old equipment, paid $7,500 and established a 4.5% long-term note payable for the balance due.

Jan 4 Equipment with a historical cost of $35,000 and an accumulated depreciation of $20,000 was traded for new dissimilar equipment valued at $60,000. The salvage value of the old equipment was $5,000 and the trade in value was $7,000. Sanford paid $4,000 for the equipment and established a 4.5% long-term note payable for the balance due.

Jan 5 Sanford Company declared a dividend of $2.00 per share payable on February 10, 20x3 to all shareholders of record on January 20, 20x3.

Jan 6 The amount in wages payable and taxes payable was paid in full.

Jan 8 Sanford Company paid a total of $18,000 on accounts payable and was able to take advantage of $1,500 in purchase discounts for early payment. The original inventory purchase was recorded at the full amount (gross method).

Jan 15 Cash sales for two weeks equaled $22,000. The cost of inventory sold equaled $12,000.

Jan 20 Supplies in the amount of $4,200 were purchased for cash.

Jan 21 A customer who owed $10,000 on an account receivable, agreed to sign a 60-day note receivable with an interest rate of 6.0%. The interest earned on the note will be paid at the maturity date of the note receivable.

Jan 29 The balance of $14,500 in accounts payable was paid.

Jan 30 The company purchased $45,000 of inventory on account with the terms 2/10, net 30. The company has decided to switch to the net method for all inventory purchases on account beginning in 20x3.

Jan 31 Cash sales for two weeks equaled $24,000. The cost of inventory sold equaled $13,000.

Jan 31 Sales on account for the month of January totaled $55,000 with the terms 2/10, net 30. The cost of inventory sold equaled $26,000.

Jan 31 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $4,000 of the revenue was earned in January.

Jan 31 Collected cash of $48,000 from the accounts receivable, plus there was a total sales discount of $1,000 for the payment of receivables within the ten day discount period.

Jan 31 Salary expenses in the amount of $14,000 and tax expenses in the amount of $8,000 were paid.

Jan 31 The utility bill of $2,500 was paid.

Jan 31 A bill in the amount of $3,600 for advertising expenses incurred during the month of January was received.

Jan 31 The monthly payment for January of the mortgage payable was made.

Feb 1 The Sanford Company made a new issue of 5,000 shares of common stock for cash. The market price of the stock was $40 per share.

Feb 2 A petty cash fund in the amount of $500 was established.

Feb 3 The Sanford Company bought back 1,000 shares of its own common stock for $40 per share.

Feb 8 The purchase of inventory on account on Jan 30th was paid in full.

Feb 10 Sanford Company sold the note receivable from Jan 21st to the bank, which discounted the note at 8.0%.

Feb 15 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $11,000.

Feb 20 The company purchases $20,000 of inventory on account with the terms 2/10, net 30.

Feb 27 The company paid an advertising bill for $5,600 which included the February advertising expense of $2,000 plus the balance due from January.

Feb 28 Cash sales for two weeks equaled $25,000. The cost of inventory sold equaled $14,000.

Feb 28 The monthly payment for February of the mortgage payable was made.

Feb 28 The company collected cash of $59,000 from the accounts receivable, plus there was a total sales discount of $1,100 for the payment of receivables within the ten day discount period.

Feb 28 Salary expenses in the amount of $21,000 and tax expenses in the amount of $9,000 were paid.

Feb 28 The utility bill of $2,100 was paid.

Feb 28 Sales on account for the month of February totaled $60,000 with the terms 2/10, net 30. The cost of inventory sold equaled $30,000.

Mar 1 The short-term note payable that was due on March 1st plus all appropriate interest was paid.

Mar 3 The amount of the petty cash fund was increased by $200.

Mar 10 Supplies in the amount of $2,700 were purchased for cash.

Mar 15 Cash sales for two weeks equaled $27,000. The cost of inventory sold equaled $15,000.

Mar 20 Sanford Company reissued 300 shares of its own stock for $42 per share.

Mar 21 The bank notified Sanford Company that the note receivable from January 21st had not been paid. The bank collected the amount of the note plus the interest due and a $20 protest fee from Sanford Company. Sanford Company charged the full amount of the note receivable plus related fees against the customer’s account receivable balance.

Mar 25 The company purchased $50,000 of inventory on account with the terms 2/10, net 30.

Mar 28 The purchase of inventory on account on Feb 20th was paid in full.

Mar 29 The petty cash fund had $150 in cash and receipts in total amounts for the following expense categories: entertainment$160, travel $170, postage $90, and supplies $115. The petty cash fund was replenished.

Mar 30 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $11,000.

Mar 30 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $9,000 of the revenue was earned in March.

Mar 31 Sales on account for the month of March totaled $67,000 with the terms 2/10, net 30. The cost of inventory sold equaled $36,000.

Mar 31 Salary expenses in the amount of $16,000 and tax expenses in the amount of $7,000 were paid.

Mar 31 Collected cash of $70,000 from the accounts receivable, plus there was a total sales discount of $1,200 for the payment of receivables within the ten day discount period.

Mar 31 A warehouse building was acquired for $250,000. Closing costs on the acquisition equaled $7,000, and there were costs of $10,300 to get the building into an operational condition to be used by Sanford Company. Employee salaries specifically related to the building renovation were an additional $5,400. This salary expense was part of the normal monthly expenses and would have been incurred regardless of whether the employees worked on the warehouse or did other activities within the company. Sanford Company paid $100,000 in cash as a down payment with the balance due being added to the mortgage payable account.

Mar 31 The utility bill of $3,000 was paid.

Mar 31 Sanford Company repaid the 90 day discounted note payable from January 2nd in full.

Mar 31 The equipment depreciation entry for the three months of 20x3 was completed.

Mar 31 The depreciation entry for the building for the months of January, February, and March was entered.

Mar 31 The amortization of intangible assets for the three months of 20x3 was completed.

Mar 31 The bad debt expense based on the aging schedule for accounts receivable was determined for the three month period.

Mar 31 Salary expenses incurred during the month of March but not yet paid equaled $8,400 and tax expenses equaled $2,800.

Mar 31 A physical inventory of supplies indicated a total amount of $5,000 of supplies still on hand.

Mar 31 A customer sent an advance payment of $10,000 for the use of special equipment in April and May.

Mar 31 The amount of rent expense for the warehouse for the first three months of 20x3 was recognized.

Mar 31 Sanford Company provided services to a customer in the amount of $3,000 during March but a bill has not been sent.

Mar 31 The amount of insurance expense for the first three months of 20x3 was recognized.

Mar 31 The amount of interest earned on marketable securities for the three months of 20x3 was recognized.

Mar 31 The amount of interest expense for the total long-term notes payable for the first three months of 20x3 was recognized.

Mar 31 The amount of interest expense for the bonds payable for the three months of 20x3 was recognized.

Mar 31 The monthly payment for March of the mortgage payable was made.

Required

1.   Supply journal entries for each of the transactions. The numbers in the journal entries can be rounded to the nearest dollar.

Answer 1

Journal Entries are as follows:

1. Accumulated Depreciation A/c Debit $3000

Cash/ Bank a/c Debit $6000

Loss of sale of equipment A/c Debit $1000

To Equipment A/c Credit $10000

(Being Equipment was sold for $6000 at loss of $1000)

2. Accumulated Depreciation A/c Debit $18000

Loss on sale of Equipment A/c Debit $2000

Disposal Cost A/c Debit $$1300

To Equipment A/c Credit $20000

To Cash A/c Credit $1300

(Being Equipment disposed off at $ 2000 loss and also additional cost on disposal of equipment was paid)

3. Bank A/c Debit $24000

To 3.0% non-interested bearing Note Payable A/c Credit $24000

(Being Sanford Company borrowed $24000 short term discounted 90 days, 3.0% non-interested bearing note payable)

4. Prepaid rent A/c Debit $18000

To Cash/ Bank A/c Credit $18000

(Being advance rent paid by Sanford company for 6 month)

5. New Equipment A/c Debit $75000

Old Equipment Accumulated Depreciation A/c Debit $35000

Loss on sale of old equipment $500

To Old Equipment a/c Credit $50000

To Cash/ Bank a/c Credit $7500

To 4.5% note payable a/c credit $53000

(Being New equipment was purchased partially in exchange of old equipment, partially cash and partially with notes payable, old was sold at loss of $500)

6. New Equipment A/c Debit $6000

Old Equipment Accumulated Depreciation A/c Debit $20000

Loss on sale of old equipment $8000

To Old Equipment a/c Credit $35000

To Cash/ Bank a/c Credit $4000

To 4.5% note payable a/c credit $49000

(Being New equipment was purchased partially in exchange of old equipment, partially cash and partially with notes payable, old was sold at loss of $500)

7. Dividend A/c Debit

To Provision for dividend A/c credit

(Being dividend was declared was Sanford Company @$2 per share)

8. Wages payable a/c Debit

taxes payable A/c debit

To Bank/ Cash A/c Credit

(Being wages payable and taxes payable was fully paid)

9. Account payable a/c debit $18000

To Bank/ Cash a/c credit $16500

To Discount A/c credit $1500

(Being account payable was paid fully and purchase discount was recorded on early payment)

10. Cash a/c debit $22000

Cost of goods sold a/c debit $12000

To sale a/c credit $22000

To Inventory A/c credit $ 12000

(Being cash sale recorded)

11. Purchase A/c Debit $4200

To cash A/c credit$4200

(Being supplies were purchased in cash)

12. 6% notes receivable A/c Debit $10000

To Customer A/c Credit $10000

(Being amount receivable from customer converted to 6%notes receivable)

13. Accounts payable A/c Debit $14500

To Bank/ Cash a/c Credit $14500

(being balance in accounts payable was paid)

14. Inventory A/c Debit $45000

to Cash/ Bank a/c credit $45000

(Being inventory was purchased)

15. Cash a/c debit $24000

Cost of goods sold a/c debit $13000

To sale a/c credit $24000

To Inventory A/c credit $ 13000

(Being cash sale recorded)

16. Customer a/c debit $55000

Cost of goods sold a/c debit $26000

To sale a/c credit $55000

To Inventory A/c credit $ 26000

(Being sale recorded)

17. Equipment rent receivable a/c Debit $4000

To Profit and Loss A/c Credit $4000

(Being earned rent for the month on Jan was booked)

18. Cash/ Bank A/c Debit $ 47000

Discount A/c Debit $ 1000

To Account receivable a/c credit $48000

(Payment received from customer, discount on early payment was recorded)

19. Salary a/c Debit $14000

tax expense a/c debit $8000

to Bank/ Cash a/c $22000

(Being salary and tax was paid)