Question

journalize each transaction.

Background:

Top Quality Appliance - Long Beach has just purchased a franchise from Top Quality Appliance (TQA). TQA is a manufacturer of kitchen appliances. TQA markets its products via retail stores that are operated as franchises. As a TQA franchise, Top Quality Appliance - Long Beach will receive many benefits, including having the exclusive rights to sell TQA brand appliances in Long Beach. In exchange for these benefits, Top Quality Appliance - Long Beach will pay an annual franchise fee to TQA based on a percentage of sales. The annual franchise fee is a separate cost and in addition to the purchase of the franchise. Top Quality Appliances - Long Beach entered into all transactions listed in the Transactions section below during 2018, its first year of operations.

01/01/2018

Received $500,000 cash and issued common stock. Opened a new checking account at Long Beach National Bank and deposited the cash received from the stockholders.

01/01/2018

Paid $50,000 cash for the TQA franchise.

01/01/2018

Paid $75,000 for store fixtures.

01/01/2018

Paid $45,000 for office equipment.

01/01/2018

Paid $600 for office supplies.

01/01/2018

Paid $3,600 for a two-year insurance policy.

01/01/2018

Paid $200,000 cash and issued a $400,000, 10-year, 5% notes payable for land with an existing building. An independent appraiser valued the land and building at $100,000 and $500,000, respectively.

01/10/2018

Purchased appliances from TQA (merchandise inventory) on account for $425,000.

01/15/2018

Established a petty cash fund for $150.

01/20/2018

Sold appliances on account to B&B Contractors for $215,000, terms n/30 (cost, $86,000). Record two separate entries.

02/01/2018

Sold appliances to Davis Contracting for $150,000 (cost, $65,000), receiving a 6-month, 8% note. Record two separate entries.

02/05/2018

Recorded credit card sales of $80,000 (cost, $35,000), net of processor fee of 2%. Record two separate entries.

02/24/2018

Received payment in full from B&B Contractors.

03/01/2018

Purchased appliances from TQA on account, $650,000.

04/01/2018

Made payment on account to TQA, $300,000.

06/01/2018

Sold appliances for cash to LB Home Builders for $350,000 (cost, $175,000). Record two separate entries.

08/01/2018

Received payment in full on the maturity date from Davis Contracting for the note from February 1.

11/01/2018

Sold appliances to Leard Contracting for $265,000 (cost, $130,000), receiving a 9-month, 8% note. Record two separate entries.

11/03/2018

Made payment on account to TQA, $500,000.

11/10/2018

Sold appliances on account to various businesses for $985,000, terms n/30 (cost, $395,000). Record two separate entries.

11/15/2018

Collected $715,000 cash on account.

12/01/2018

Paid cash for expenses: Salaries, $180,000; Utilities, $12,650 (prepare one compound entry).

12/01/2018

Replenished the petty cash fund when the fund had $62 in cash and petty cash tickets for $85 for office supplies.

12/15/2018

Paid dividends, $5,000.

12/31/2018

Paid the franchise fee to TQA of 5% of total sales of $2,045,000.

12/31/2018

The bank reconciliation revealed $1,565 of interest earned on the checking account.

12/31/2018

The bank reconciliation revealed bank fees totaling $2,465 for the year.

12/31/2018

(Adjustment 9) Calculate the interest owed on the note payable.

12/31/2018

(Adjustment 2) Management estimated that 5% of Accounts Receivable will be uncollectible.

12/31/2018

(Adjustment 3) An inventory of office supplies indicates $475 of supplies have been used.

12/31/2018

(Adjustment 4) Accrued interest revenue on the Leard Contracting note (round your answer to the nearest whole dollar).

12/31/2018

(Adjustment 5) Record depreciation expense on the building. The company uses the straight-line depreciation method, and believes the building will last for 30 years and have a $50,000 residual value.

12/31/2018

(Adjustment 6) Record depreciation expense on the fixtures. The company uses straight-line depreciation method, and believes the fixtures will last for 15 years with zero residual value.

12/31/2018

(Adjustment 7) Record depreciation expense on the office equipment. The company uses the double declining-balance depreciation method, and believes the equipment will last for 5 years and have a $5,000 residual value.

12/31/2018

(Adjustment 8) Record amortization expense for the year on the franchise, which has a 10-year life.

12/31/2018

(Adjustment 1) One year of the prepaid insurance has expired.

Answer 1