In: Accounting
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.)
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) |