Question

In: Accounting

Ivanhoe Corporation’s trial balance at December 31, 2020, is presented below. All 2020 transactions have been...

Ivanhoe Corporation’s trial balance at December 31, 2020, is presented below. All 2020 transactions have been recorded except for the items described below.

Debit

Credit

Cash

$27,700

Accounts Receivable

54,000

Inventory

23,100

Land

65,800

Buildings

86,900

Equipment

31,000

Allowance for Doubtful Accounts

$440

Accumulated Depreciation—Buildings

27,000

Accumulated Depreciation—Equipment

15,000

Accounts Payable

19,000

Interest Payable

–0–

Dividends Payable

–0–

Unearned Rent Revenue

8,000

Bonds Payable (10%)

50,000

Common Stock ($10 par)

32,000

Paid-in Capital in Excess of Par—Common Stock

6,400

Preferred Stock ($20 par)

–0–

Paid-in Capital in Excess of Par—Preferred Stock

–0–

Retained Earnings

26,860

Treasury Stock

–0–

Cash Dividends

–0–

Sales Revenue

615,000

Rent Revenue

–0–

Bad Debt Expense

–0–

Interest Expense

–0–

Cost of Goods Sold

408,000

Depreciation Expense

–0–

Other Operating Expenses

39,300

Salaries and Wages Expense

63,900

      Total

$799,700

$799,700


Unrecorded transactions and adjustments:

1. On January 1, 2020, Ivanhoe issued 1,200 shares of $20 par, 6% preferred stock for $26,400.
2. On January 1, 2020, Ivanhoe also issued 1,100 shares of common stock for $26,400.
3. Ivanhoe reacquired 320 shares of its common stock on July 1, 2020, for $50 per share.
4. On December 31, 2020, Ivanhoe declared the annual cash dividend on the preferred stock and a $1.30 per share dividend on the outstanding common stock, all payable on January 15, 2021.
5. Ivanhoe estimates that uncollectible accounts receivable at year-end is $5,400.
6. The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,900.
7. The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $3,100.
8. The unearned rent was collected on October 1, 2020. It was receipt of 4 months’ rent in advance (October 1, 2020 through January 31, 2021).
9. The 10% bonds payable pay interest every January 1. The interest for the 12 months ended December 31, 2020, has not been paid or recorded.


(Ignore income taxes.)

Solutions

Expert Solution

Answer: Journal Entries

No. Date Account Title and Explanation Debit $ Credit $
1 1-Jan Cash 26,400
Preferred Stock (1,200*20) 24,000
Paid in Capital in Excess of Par-Preferred Stock 2,400
(To record issue of preferred stock)
2 1-Jan Cash 26,400
Common Stock (1,100*10) 11,000
Paid in Capital in Excess of Par-Common Stock 15,400
(To record issue of common stock)
3 1-Jul Treasury Stock (320*50) 16,000
Cash 16,000
(To record stock recquired)
4 31-Dec Cash Dividends (24,000*6%)+(((32,000/10)+1,100-320)*1.30) 6,614
Dividends Payable 6,614
(To record dividend payable)
5 31-Dec Bad debts expense (5,400-440) 4,960
Allowance for doubful accounts 4,960
(To record uncollectible receivable accounts)
6 31-Dec Depreciation expense (86,900-5,900)/30 2,700
Accumulated Depreciation-Buildings 2,700
(To record depreciation on buildings)
7 31-Dec Depreciation expense (31,000-3,100)/10 2,790
Accumulated Depreciation-Equipment 2,790
(To record depreciation on equipment)
8 31-Dec Unearned Rent Revenue (8,000*3/4) 6,000
Rent Revenue 6,000
(To record unearned rent revenue)
9 31-Dec Interest expense (50,000*10%) 5,000
Interest Payable 5,000
(To record interest payable)

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