Question

I need Journal Entries for each of these, Adjusted Journal Entries for each of these, T- Accounts for each of these entries, a Trial Balance for all these entries, an Income Statement for all of these entries and a Balance Sheet for each of these entries

Mason Automotive is an automotive parts company that sells car parts and provides car service to customers. This is Mason's first year of operations and they have hired you as their CPA to prepare the income statement and balance sheet for their company. As such, January 1st , 2019 was the first day that Mason was in business. For the month of January, record all the necessary journal entries for transactions that occurred during the month. In addition, please prepare all necessary adjusting journal entries as of the end of the month.

From the information below, please fill out the "journal entries tab" for all the necessary journal entries. Furthermore, please complete the "T-Accounts" tab for the individual accounts so that the trial balance tab can be updated (automatically). I prepared the first journal entry for you in the journal entries tab and T-Accounts tab. Ensure you label the entries similar to how I have shown in Entry #1.

Once all entries are recored and the T-Accounts tab is updated, please prepare the financial statements (income statement and balance sheet) for the month of January.

Journal Entry #1

Mason Automotive sells 20,000,000 shares at $1 par for $20 on January 1st, 2019.

Journal Entry #2

Ed Mason, the CEO, hires 4,500 employees, whom will receive a combined salary of $5 Million on a monthly basis. The employees started on January 1st and will be paid for the month of January on February 4th. Employee's withholdings are as follows: 10% for federal income taxes 5.5% for state income taxes and 9% for FICA. Record the necessary entry as of January 1st, 2019.

Journal Entry #3

On January 20th, Mason Automotive decides to purchase 100,000 shares of Treasury stock at $23 per share.

Journal Entry #4

Mason Automotive issues a bond payable on January 1st, 2019 with a face value of $100 Million at 97. The bond will have a useful life of 20 years with an interest payment of 6% (Annual Percentage Rate) due at the end of the month. Record the necessary journal entry as of January 1st, 2019.

(Note: When considering the amortization of the discount or premium, assume the straight line method is used).

Journal Entry #5

On January 1st, Mason Automotive receives $50 Million advance payment from a customer, Highland Inc., to manufacture 5,000 cars.

Journal Entry #6

Mason Automotive purchased $253 Million dollars worth of inventory on January 2nd, 2019. $87 Million was paid with cash with the remaining balance on account. Mason notes that it will use a perpetual inventory system to track inventory.

Journal Entry #7

On January 2nd, Mason Automotive shipped an order to Panther Paws Corporation. The shipping terms were FOB shipping point. The sales value of the order was $207 Million and the inventory cost was $157 Million. Assume that this sale was made on account.

Journal Entry #8

Mason Automotive pre-pays for Rent Expense for the next year of $15.6 Million on January 3rd, 2019.

Journal Entry #9

Mason Automotive purchased $5 Million dollars worth of supplies on account on January 2nd, 2019.

Journal Entry #10

Mason Automotive buys a patent from Apple for $21 Million on January 3rd, 2019. The patent has a legal life of 25 years and useful life of 20 years. Record the necessary entry as of January 3rd, 2019. Assume the patent was purchased using cash.

Journal Entry #11

Mason Automotive purchases fixed assets of $170 Million that will have a useful life of 20 years and a salvage value of $20 million on January 4th, 2019. $30 million was paid with cash with the remaining balance on account. These assets are depreciated using the straight-line method.

Answer 1

Journal Entries
Date	Account Name	Debit	Credit
01-Jan	Cash	$    400,000,000
	Common Stock		$        20,000,000
	Additional Paid in Capital		$      380,000,000
01-Jan	Salary Expense	$         5,000,000
	Salary Payable		$          3,775,000
	Federal Income Taxes Payable		$              500,000
	State Income Taxes Payable		$              275,000
	FICA		$              450,000
01-Jan	Cash	$       97,000,000
	Discount on Bonds Payable	$         3,000,000
	6% Bonds Payable		$      100,000,000
01-Jan	Cash	$       50,000,000
	Unearned Revenue		$        50,000,000
02-Jan	Purchases	$    253,000,000
	Cash		$        87,000,000
	Accounts Payable		$      166,000,000
02-Jan	Accounts Receivable	$    207,000,000
	Sales Revenue		$      207,000,000
02-Jan	Supplies	$         5,000,000
	Accounts Payable		$          5,000,000
03-Jan	Patent	$       21,000,000
	Cash		$        21,000,000
03-Jan	Prepaid Rent	$       15,600,000
	Cash		$        15,600,000
04-Jan	Fixed Asset	$    170,000,000
	Cash		$        30,000,000
	Accounts Payable		$      140,000,000
20-Jan	Treasury Stock	$         2,300,000
	Cash		$          2,300,000
31-Jan	Interest Expense	$             512,500
	6% Bonds Payable		$              500,000
	Discount on Bonds Payable		$                12,500
31-Jan	Rent Expense	$         1,300,000
	Prepaid Rent		$          1,300,000
31-Jan	Amotization Expense	$               87,500
	Accumulated Amortization		$                87,500
31-Jan	Depreciation Expense	$             625,000
	Accumulated Depreciation		$              625,000
31-Jan	6% Bonds Payable	$             500,000
	Cash		$              500,000

Working Note:

1. Calculation of Rent Expense:
Full Year Rent / 12 Months
15,600,000 / 12 Months
1,300,000

2. Calculation of Amortization Expense:
Cost of Patent / Useful Life in Months
21,000,000 / (20*12)
87,500
For the purpose of calculation of Amortization Useful Life will be considered instead of Legal Life because Useful Life is the period during which the Patent will be utilised by the Entity.

3. Calculation of Depreciation Expense:
(Cost of Fixed Asset - Salvage Value) / Useful Life in Months
(170,000,000 - 20,000,000) / (20*12)
625,000

Income Statement
For the Month of January
REVENUES:
Sales Revenue	$                                  207,000,000
TOTAL REVENUES	$                                  207,000,000
Cost of Goods Sold	$                                  157,000,000
GROSS PROFIT	$                                    50,000,000
EXPENSES:
Supplies	$                                       5,000,000
Salary Expense	$                                       5,000,000
Interest Expense	$                                          512,500
Rent Expense	$                                       1,300,000
Amortization Expense	$                                             87,500
Depreciation Expense	$                                          625,000
TOTAL EXPENSES	$                                    12,525,000
NET INCOME BEFORE TAXES	$                                    37,475,000
LESS: INCOME TAX EXPENSE	$                                                      -
NET INCOME	$                                    37,475,000

BALANCE SHEET
AS AT THE END OF MONTH OF JANUARY
ASSETS:
Non Current Assets:
Fixed Assets	$                        170,000,000
Less: Accumulated Depreciation	$                              (625,000)
Patent	$                          21,000,000
Less: Accumulated Amortization	$                                (87,500)
Investments:
Treasury Stock	$                             2,300,000
Current Assets:
Inventory	$                          96,000,000
Accounts Receivable	$                        207,000,000
Prepaid Rent	$                          14,300,000
Cash	$                        390,600,000
Other Current Assets:
Discount on Bonds Payable	$                             2,987,500
TOTAL ASSETS	$                        903,475,000
EQUITY AND LIABILITIES:
Non- Current Liabilities:
6% Bonds Payable	$                        100,000,000
Current Liabilities:
Statutory Dues Payable	$                             1,225,000
Salary Payable	$                             3,775,000
Unearned Revenue	$                          50,000,000
Accounts Payable	$                        311,000,000
Equity:
Common Stock	$                          20,000,000
Additional Paid in Capital	$                        380,000,000
Retained Earnings	$                          37,475,000
TOTAL EQUITY AND LIABILITIES	$                        903,475,000

T - ACCOUNTS:

Cash Account
Common Stock	$                  20,000,000	Purchases	$              87,000,000
Additional Paid in Capital	$                380,000,000	Patent	$              21,000,000
6% Bonds Payable	$                  97,000,000	Prepaid Rent	$              15,600,000
Unearned Revenue	$                  50,000,000	Assets	$              30,000,000
		Treasury Stock	$                2,300,000
		6% Bonds Payable	$                    500,000
		Closing Balance	$           390,600,000
	$                547,000,000		$           547,000,000

Common Stock Account
		Cash	$              20,000,000

Additional Paid in Capital Account
		Cash	$           380,000,000

Salary Expense Account
Salary Payable	$                     3,775,000
Federal Income Taxes Payable	$                        500,000
State Income Taxes Payable	$                        275,000
FICA	$                        450,000

6% Bonds Payable Account
		Cash	$              97,000,000
		Discount on Bonds Payable	$                3,000,000