Question

XOS Corporation (XOS) sells accounting-related memorabilia at a small store. The company was organized and began operations on January 1, 2016.

Events During January, 2016:

1. On January 1, the owner invested $100,000 cash in the company, receiving 1,000 shares of $2 par value common stock in exchange.

2. On January 1, XOS purchased furniture and fixtures for $30,000.  Paid $5,000 cash down, and signed a promissory note with a 12% annual rate of interest for the balance of the purchase price. Note plus interest to be paid in 2 years.

3. On January 1, XOS paid two months rent in advance to mall owners for floor space, $6,000.

4. On January 1, XOS paid a one-year premium for liability and casualty insurance, $1,200.

5. During January, the company purchased merchandise inventory on account for $25,000.

6. During January, sales totaled $48,000 ($28,000 for cash and $20,000 on credit). The cost of the merchandise sold was $20,000.  XOS uses a perpetual inventory system.

7. During January, the company paid wages totaling $3,000.

8. During January, payments on account to suppliers of inventory totaled $9,000.

9. During January, a customer ordered 100 custom-made t-shirts saying “SOX ROX!”-for delivery in February, 2016.  XOS required payment in advance ($1,000) for the entire order.

10.  During January, customers paid $10,000 to XOS for sales made on credit

Additional Information:

The furniture and fixtures have an expected useful life of 5 years and zero expected salvage value.   XOS uses the straight-line method of depreciation.

At January 31, employees have earned wages of $1,000 that will not be paid until February.

Utilities charges for January are estimated to be $600. However, the utilities bill will not be received and paid until mid-February.

Requirements

*2. Prepare any necessary adjusting journal entries at January 31, and post related amounts to the T-Accounts. Then prepare an adjusted trial balance at January 31.

(Hint:  There are 6 AJE’s)

Answer 1

XOS Corporation
Journal Entries
Cash	$     1,00,000.00
To Common Stock		$                                            2,000.00
To Paid in Capital excess of Par		$                                          98,000.00
(Being amount invested in business in exchange for 1000 shares @2 par value per share)
Furniture & Fixture	$         30,000.00
To Cash		$                                            5,000.00
To Note Payable		$                                          25,000.00
(Being amount of Furinture & fixture purchased by paying $5000 cash and balance in paying promissory note at interest rate of 12%)
Prepaid Rent	$           6,000.00
To Cash		$                                            6,000.00
(Being amount of two months rent paid in advance)
Prepaid Insurance	$           1,200.00
To Cash		$                                            1,200.00
(Being amount of one year casualty insurance paid)
Merchandise Inventory	$         25,000.00
To Accounts Payable		$                                          25,000.00
(Being amount of Merchandise purchased on account)
Cash	$         28,000.00
Accounts Receivable	$         20,000.00
To Sales		$                                          48,000.00
(Being amount of sales)
Cost of goods sold	$         20,000.00
To Merchandise Inventory		$                                          20,000.00
(Being amount of cost of goods sold)
Wages	$           3,000.00
To Cash		$                                            3,000.00
(Being amount of wages paid)
Accounts Payable	$           9,000.00
To cash		$                                            9,000.00
(Being amount of Paid to suppliers for Inventory)
Cash	$           1,000.00
To Unearned Revenue		$                                            1,000.00
(Being amount of Cash received advance for supply of T-Shirt)
Cash	$         10,000.00
To Accounts Receivable		$                                          10,000.00
(Being amount received from customers)
Depreciation=($30000/5)	$           6,000.00
To Accumulated Depreciation		$                                            6,000.00
(Being amount of Depreciation)
Wages	$           1,000.00
To Wages Payable		$                                            1,000.00
(Being amount of Wages outstanding)
Utilties Expenses	$               600.00
To Utilities Expenses Payable		$                                                600.00
(Being amount of Utilties expenses of Jan outstanding)
Rent	$           3,000.00
To Prepaid rent		$                                            3,000.00
(Being amount of One month Rent)
Insurance	$               100.00
To Prepaid Insurance		$                                                100.00
(Being amount of Prepaid Insurance)
Cash
Particular	Amt (DR)	Amount (Cr)	Balance
Common Stock	$           2,000.00		$                2,000.00
Paid in Capital Excess of Par	$         98,000.00		$          1,00,000.00
Furniture & Fixture		$                                            5,000.00	$             95,000.00
Prepaid Rent		$                                            6,000.00	$             89,000.00
Prepaid Insurance		$                                            1,200.00	$             87,800.00
Sales	$         28,000.00		$          1,15,800.00
Wages		$                                            3,000.00	$          1,12,800.00
Accounts Payable		$                                            9,000.00	$          1,03,800.00
Unearned Revenue	$           1,000.00		$          1,04,800.00
Accounts Receivable	$         10,000.00		$          1,14,800.00
Common Stock
Particular	Amt (DR)	Amount (Cr)	Balance
Cash		$                                            2,000.00	$                2,000.00
Paid in Capital Excess of Par
Particular	Amt (DR)	Amount (Cr)	Balance
Cash		$                                          98,000.00	$                2,000.00
			98,000.00
Prepaid Rent
Particular	Amt (DR)	Amount (Cr)	Balance
Cash	$           6,000.00		$                6,000.00
Rent		$                                            3,000.00	3,000.00
Rent
Particular	Amt (DR)	Amount (Cr)	Balance
Prepaid Rent	$           3,000.00		$                3,000.00
Prepaid Insurance
Particular	Amt (DR)	Amount (Cr)	Balance
Cash	$           1,200.00		$                1,200.00
Insurance		$                                                100.00	1,100.00
Insurance
Particular	Amt (DR)	Amount (Cr)	Balance
Prepaid Insurance	$               100.00		$                   100.00
Note Payable
Particular	Amt (DR)	Amount (Cr)	Balance
Furniture & Fixture		$                                          25,000.00	$             25,000.00
Accounts Receivable
Particular	Amt (DR)	Amount (Cr)	Balance
Sales	$         20,000.00		$             20,000.00
Cash		$                                          10,000.00	$             10,000.00
Sales
Particular	Amt (DR)	Amount (Cr)	Balance
Cash	$         28,000.00		$             28,000.00
Accounts Receivable	$         20,000.00		$             48,000.00
Accounts Payable
Particular	Amt (DR)	Amount (Cr)	Balance
Merchandise Inventory		$                                          25,000.00	$             25,000.00
Cash	$           9,000.00		$             16,000.00
Unearned Revenue
Particular	Amt (DR)	Amount (Cr)	Balance
Cash		$                                            1,000.00	$                1,000.00
Utiltiy Expenses
Particular	Amt (DR)	Amount (Cr)	Balance
Utiltity Expenses Payable	$               600.00		$                   600.00
Wages Expenses
Particular	Amt (DR)	Amount (Cr)	Balance
Cash	$           3,000.00		$                3,000.00
Wages Payable	$           1,000.00		$                4,000.00
Wages Payable
Particular	Amt (DR)	Amount (Cr)	Balance
Cash		$                                            1,000.00	$                1,000.00
Unearned Revenue
Particular	Amt (DR)	Amount (Cr)	Balance
Cash		$                                            1,000.00	$                1,000.00
Merchandise Inventory
Particular	Amt (DR)	Amount (Cr)	Balance
Accounts Payable	$         25,000.00		$             25,000.00
Cost of goods sold		$                                          20,000.00	$                5,000.00
Cost of goods sold
Particular	Amt (DR)	Amount (Cr)	Balance
Merchandise Inventory	$         20,000.00		$             20,000.00
XOS
Trial Balance
On Jan 31st,2016
Account Title & Explaination	Amt (Dr)	Amt (Cr)
Cash	$     1,14,800.00
Accounts Receivable	$         10,000.00
Merchandise Inventory	$           5,000.00
Cost of goods sold	$         20,000.00
Prepaid Rent	$           3,000.00
Prepaid Insurance	$           1,100.00
Furniture & Fixture	$         30,000.00
Accumulated Depreciation		$                                            6,000.00
Accounts Payable		$                                          16,000.00
Wages Payable		$                                            1,000.00
Utitlites Payable		$                                                600.00
Sales		$                                          48,000.00
Uneaned Revenue		$                                            1,000.00
Common Stock		$                                            2,000.00
Paid in Capital		$                                          98,000.00
Note Payable		$                                          25,000.00
Wages Expenses	$           4,000.00
Utiltites Expenses	$               600.00
Depreciation Expenses	$           6,000.00
Rent	$           3,000.00
Insurance	$               100.00
Total	$     1,97,600.00	$                                      1,97,600.00