Question

In: Accounting

Chart of Accounts for Techno Engineering Supplies Company Assets: 101 Cash 105 Accounts Receivable 110 Note...

Chart of Accounts for Techno Engineering Supplies Company

Assets:

101 Cash

105 Accounts Receivable

110 Note Receivable

115 Inventory

120 Prepaid Insurance

125 Warehouse Building

130 Equipment

Liabilities:

201 Account Payable

205 Note Payable

210 Wages Payable

215 Loan Payable

220 Interest Payable

Owners’ Equity:

301 Capital Stock

310 Dividends

Revenues:

401 Sales Revenue

405 Interest Revenue

Expenses:

501 Cost of Goods Sold

505 Wages Expense

510 Utilities Expense

515 Insurance Expense

520 Income Tax Expense

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Assume the following: Revolution Store had the following transactions:

Jan-01 Issued capital stock for $980,000.

Jan-01 Purchased a Packaging Equipment for $25,000 with a useful life of 10 years and a Salvage value of $1,500.

Jan-01 Purchased an Insurance Policy (1 year) for $35,000.

Jan-03 Purchased a Truck, paying $10,000 in cash and issuing a note of $20,000.

Jan-05 Purchased $20,000 of inventory on account.

Jan-07 Sold inventory costing $5,000 for $50,000 on account.

Jan-11 Paid $1,000 for inventory purchased on account (from Jan-05).

Jan-15 Collect $15,550 of accounts receivable from customers (from Jan-07).

Jan-17 Paid utility bills totaling $500.

Jan-23 Paid wages for $9,000.

Jan-25 Collect $300 in bank interest.

Jan-30 Paid $2,500 due to income taxes.

Jan-31 Adjust the Insurance account and depreciation expense at the end of the month.

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***Required:

-Record the above transactions in General Journal (Journal Entries).

-Record the transactions in General Ledger format (T-Accounts).

-Prepare a Trial Balance for Techno Engineering Company.

-Prepare Income Statement.

-Prepare Retained Earnings Statement.

-Prepare Balance Sheet.

-Prepare a Cash Flow Statement

Expert Solution

Answer:
Requirement 1	Journal Entries would be made as follows:

Date	Account title and explanation	Debit	Credit

Jan-01	Cash	$ 9,80,000.00
	Capital Stock		$ 9,80,000.00
	(To record issue of capital stock)

Jan-01	Packaging Equipment	$ 25,000.00
	Cash		$ 25,000.00
	(To record purchase of packaging equipment)

Jan-01	Prepaid Insurance	$ 35,000.00
	Cash		$ 35,000.00
	(To record purchase of incurance policy for one year)

Jan-03	Truck	$ 30,000.00
	Cash		$ 10,000.00
	Notes payable		$ 20,000.00
	(To record purchase of truck)

Jan-05	Merchandise Inventory	$ 20,000.00
	Accounts Payable		$ 20,000.00
	(To record credit purchase)

Jan-07	Accounts receivable	$ 50,000.00
	Sales revenue		$ 50,000.00
	(To record credit Sale)

Jan-07	Cost of goods sold	$ 5,000.00
	Merchandise Inventory		$ 5,000.00
	(To record cost of goods sold)

Jan-11	Accounts Payable	$ 1,000.00
	Cash		$ 1,000.00
	(To record Cash paid to supplier)

Jan-15	Cash	$ 15,550.00
	Accounts Receivable		$ 15,550.00
	(To record collection from customer)

Jan-17	Utilities Expenses	$ 500.00
	Cash		$ 500.00
	(To record utilities expenses)

Jan-23	Wages expenses	$ 9,000.00
	Cash		$ 9,000.00
	(To record wages expenses)

Jan-25	Cash	$ 300.00
	Interest Revenue		$ 300.00
	(To record interest revenue)

Jan-30	Income tax expenses	$ 2,500.00
	Cash		$ 2,500.00
	(To record income tax expense)

Jan-31	Depreciation expense	$ 2,350.00		($25,000-1,500)/10 years
	Accumulated Depreciation-Equipment		$ 2,350.00
	(To record depreciation expense)

Jan-31	Insurance Expense	$ 2,916.67		($35,000/12 months)
	Prepaid insurance		$ 2,916.67
	(TO record insurance expense)


Requirement 2	The T-Accounts would be prepared as follows:

	Cash
	Date	Debit	Date	Credit
	Jan-01	$ 9,80,000.00	Jan-01	$ 25,000.00
	Jan-15	$ 15,500.00	Jan-01	$ 35,000.00
	Jan-25	$ 300.00	Jan-03	$ 10,000.00
			Jan-11	$ 1,000.00
			Jan-17	$ 500.00
			Jan-23	$ 9,000.00
			Jan-30	$ 2,500.00
	End. Bal	$ 9,12,800.00
		(Sum of all debits Less Sum of all credits)

	Common Stock
	Date	Debit	Date	Credit
			Jan-01	$ 9,80,000.00

	Merchandise Inventory
	Date	Debit	Date	Credit
	Jan-05	$ 20,000.00	Jan-07	$ 5,000.00
	End. Bal	$ 15,000.00
		(20,000-5,000)
	Account payable
	Date	Debit	Date	Credit
	Jan-11	$ 1,000.00	Jan-05	$ 20,000.00
			End. Bal	$ 19,000.00
				(20,000-1,000)
	Sales Revenue
	Date	Debit	Date	Credit
			Jan-07	$ 50,000.00


	Accounts receivable
	Date	Debit	Date	Credit
	Jan-07	$ 50,000.00	Jan-15	$ 15,500.00
	End. Bal	$ 34,500.00
		(50,000-15,500)

	Note Payable
	Date	Debit	Date	Credit
			Jan-03	$ 20,000.00


	Truck
	Date	Debit	Date	Credit
	Jan-03	$ 30,000.00


	Packaging Equipment
	Date	Debit	Date	Credit
	Jan-01	$ 25,000.00


	Prepaid Insurance
	Date	Debit	Date	Credit
	Jan-01	$ 35,000.00	Jan-31	$ 2,916.67
	End. Bal.	$ 32,083.33
		(35,000-2916.67)

	Cost of goods sold
	Date	Debit	Date	Credit
	Jan-07	$ 5,000.00

	Utilities expenses
	Date	Debit	Date	Credit
	Jan-17	$ 500.00

	Wages expense
	Date	Debit	Date	Credit
	Jan-23	$ 9,000.00

	Interest Revenue
	Date	Debit	Date	Credit
			Jan-25	$ 300.00

	Income tax expense
	Date	Debit	Date	Credit
	Jan-30	$ 2,500.00

	Depreciation expenses
	Date	Debit	Date	Credit
	Jan-31	$ 2,350.00

	Accumulated Depreciation-Equipment
	Date	Debit	Date	Credit
			Jan-31	$ 2,350.00
	Insurance Expenses
	Date	Debit	Date	Credit
	Jan-31	$ 2,916.67


Requirement 3	Trial Balance
		Debit	Credit
	Cash	$ 9,12,800.00
	Accounts receivable	$ 34,500.00
	Inventory	$ 15,000.00
	Prepaid Insurance	$ 32,083.33
	Truck	$ 30,000.00
	Packaging Equipment	$ 25,000.00
	Accumulated Depreciation-Equipment		$ 2,350.00
	Accounts payable		$ 19,000.00
	Notes Payable		$ 20,000.00
	Commomstock		$ 9,80,000.00
	Sales revenue		$ 50,000.00
	Interest Revenue		$ 300.00
	Cost of goods sold	$ 5,000.00
	Wages Expenses	$ 9,000.00
	Insurance expense	$ 2,916.67
	Utilities expense	$ 500.00
	Income tax expense	$ 2,500.00
	Depreciation Expense	$ 2,350.00
		$ 10,71,650.00	$ 10,71,650.00
			$ -
Requirement 4	Income Statement

	Particulars
	Sales Revenue		$ 50,000.00
	Less:Cost of goods sold		$ 5,000.00
	Gross Profit		$ 45,000.00	(50,000-5,000)
	Less: Operating Expenses
	Wages Expenses	$ 9,000.00
	Insurance expense	$ 2,916.67
	Utilities expense	$ 500.00
	Income tax expense	$ 2,500.00
	Depreciation Expense	$ 2,350.00	$ 17,266.67
	Net profit		$ 27,733.33	(45,000-17,266.67)

ekkarill92 answered 1 year ago

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