Question

Instructions: Prepare journal entries for each event below:

The 2013 balance sheet of the Captain Jet Inc. is attached. During 2014, the following events occurred.

1. On January 10, sell merchandise on account to Rayms $9,600 and Fischer $8,800. Terms 2/10, n/30. Freight $100 for each sale, F.O.B. shipping point.
2. On January 12, purchase merchandise on account from Zapfel $3,000 and Liotta $2,400. Terms 1/10, n/30. Freight $120 for each sale, F.O.B. destination.
3. Receive checks, $4,000 from Longhini and $2,000 from Hall, for sales on account after discount period has lapsed.
4. On January 15, send checks to Joosten for 9,000 less 2% cash discount, and to Maida for $11,000 less 1% cash discount.
5. On January 16, issue credit of $400 to Fieber for merchandise returned.
6. Summary daily cash sales total $15,500.
7. On January 21, pay off the balances to Zapfel and Liotta for the purchases on January 12.
8. On Feburary 9, receive payment in full from Rayms and Fischer.
9. On March 1, pay rent of $6,000 for a two-year term.
10. On April 1, sell merchandise on account to Dunlap $1,600, term 2/10, n/30. Freight $80, F.O.B. shipping point.
11. Pay $400 cash for office supplies.
12. Cash dividends totaling $800 are declared on June 13 and paid to stockholders on June 23.
13. Issue a note of $120,000 to bank (one year, annual interest rate 3%) for cash.
14. On July 5, purchase merchandise from Maida $33,000, terms 3/10, n/30.
15. On July 7, issue common stock 1000 shares, $10 par, in exchange of a land with a fair market value of $15,000.
16. On July 8, return $200 of merchandise to Maida and receive credit.
17. On August 1, sell merchandise to Lachey on account $80,000, term 1/10, n/30. Freight $1,500, F.O.B. shipping point.
18. Pay off the balance to Maida on August 4.
19. On August 10, receive half of the payment from Lachey.
20. On August 14, write off $1,300 bad debt for one account, Tooket.
21. Pay utitlities expense, $10,902.
22. On August 31, Lachey pays off its balance.
23. On September 1, pay cash $7,500 to Farmington for merchandise purchased last year.
24. On October 1, pay off notes payable $110,000 and associated accrued interest $6,000, of which $1,500 was shown on the balance sheet.
25. Over the year, sales and office employees earned $45,500 in salaries and wages, of which $1,500 was still payable at the end of year.
26. An unpaid utilities bill (December, $1,250) is due on January 10 next year.

Additional Information at the end of the year:
1. Depreciation expense for the year was $14,250.
2. The company estimated that it has to pay federal income tax, $3,250.
3. After physically counting, the company decided that the ending inventories worth $40,146.
4. Based on its historical data, the company estimated that the bad debts were about 1% of net credit sales.
5. Unearned revenue is decreased by $10,000.
6. The company expenses all of the supplies purchased during the year.
7. No insurance policy is effective during the year.
8. The company used the gross method to record its purchases and sales on credit.
9. The company adopts the periodic inventory system.

Answer 1

In the book of Captain Jet Inc. :

Transaction / Event	Date	Account Titles	Debit	Credit
	2014		$	$
1.	Jan 10	Accounts Receivable: Rayms	9,700
		Accounts Receivable: Fischer	8,900
		Sales		18,400
		Cash		200
2.	Jan 12	Purchases	5,400
		Accounts Payable : Zapfel		2,880
		Accounts Payable: Liotta		2,280
		Cash		240
3.		Cash	6,000
		Accounts Receivable: Longhini		4,000
		Accounts Receivable: Hall		2,000
4.	Jan 15	Accounts Payable: Joosten	9,000
		Accounts Payable: Maida	11,000
		Purchase Discounts		290
		Cash		19,710
5.	Jan 16	Sales Returns and Allowances	400
		Accounts Receivable: Feiber		400
6.		Cash	15,500
		Sales		15,500
7.	Jan 21	Accounts Payable	2,880
		Accounts Payable	2,280
		Purchase Discounts		54
		Cash		5,106
8.	Feb 9	Cash	18,600
		Accounts Receivable: Rayms		9,700
		Accounts Receivable: Fischer		8,900
9.	Mar 1	Prepaid Rent	6,000
		Cash		6,000
10.	Apr 1	Accounts Receivable: Dunlap	1,680
		Sales		1,600
		Cash		80
11.		Office Supplies	400
		Cash		400
12.	June 13	Retained Earnings	800
		Dividends Payable		800
12.	June 23	Dividends Payable	800
		Cash		800

Contd.

13.		Cash	120,000
		Note Payable		120,000
14.	July 5	Purchases	33,000
		Accounts Payable: Maida		33,000
15.	July 7	Land	15,000
		Common Stock		10,000
		Paid-In Capital in Excess of Par: Common Stock		5,000
16.	July 8	Accounts Payable: Maida	200
		Purchase Returns and Allowances		200
17	Aug 1	Accounts Receivable: Lachey	81,500
		Cash		1,500
		Sales		80,000
18.	Aug 4	Accounts Payable: Maida	32,800
		Cash		32,800
19.	Aug 10	Cash	40,350
		Sales Discount	400
		Accounts Receivable: Lachey		40,750
20	Aug 14	Allowance for Doubtful Accounts	1,300
		Accounts Receivable: Tooket		1,300
21		Utilities Expense	10,902
		Cash		10,902
22	Aug 31	Cash	40,750
		Accounts Receivable: Lachey		40,750
23	Sep 1	Accounts Payable: Farmington	7,500
		Cash		7,500
24.	Oct 1	Notes Payable	110,000
		Accrued Interest	1,500
		Interest Expense	4,500
		Cash		116,000
25.		Salaries and Wages Expense	45,500
		Cash		44,000
		Salaries and Wages Payable		1,500
26.		Utilities Expense	1,250
		Accounts Payable		1,250