Question

Provide the journal entry to record each transaction.

(1) In March 2014, Kicker Inc. received an advance payment of $14,000 from Rally Corporation for consulting services. Kicker performed half of the consulting in 2014 and the remainder in 2015. Kicker uses the accrual method of accounting. When preparing its financial statements on December 31, 2014, what adjusting journal entry will Kicker Inc. record?

(2) Taco Tuesday Company sells merchandise to Freedom Friday Corporation on January 4, 2016 for $2,000 cash. Taco Tuesday paid $1,100 for the merchandise from its vendor. What will Taco Tuesday record on January 4 for this sale?

(3) Jasmine Company purchases merchandise for resale from Aladdin Corporation for $1,000 with the terms 1/10, n/30. Jasmine also pays $200 in cash for freight costs related to this purchase. What will Jasmine Company record in its records on the date of purchase?

(4) Using the information provided in the trial balance, prepare the closing journal entries using Retained Earnings.

	Debit	Credit
Cash	$50,000
Accounts Receivable	42,000
Inventory	28,000
Accounts Payable	16,000
Notes Payable	30,000
Common Stock		$10,000
Retained Earnings		94,000
Dividends	4,000
Sales Revenue		$98,000
Interest Revenue		2,000
Salaries Expense	24,000
Advertising Expense	8,000
Utilities Expense	2,000
Totals	$204,000	$204,000

(5) Glass Slipper Industries sells merchandise to Big Foot Corporation for $3,000 on September 5, 2016 with the terms 2/10, n/30.   The merchandise cost $2,000 from the vendor.

(a) On September 10, Big Foot returns 20% of the merchandise and receives a credit from Glass Slipper for the returned merchandise. What entry will Glass Slipper prepare on September 10?

(b) On September 14, Big Foot pays the remaining balance to Glass Slipper. What entry will Glass Slipper prepare on September 14?

Answer 1

Requirement		Date	Accounts title			Debit $	Credit $
1		Dec31 2014	Unearned Revenue Account Dr.			7000
			Service revenue Account				7000
			(for half revenue recognized in the year for service performed)
2		Jan 42016	Cash Account Dr.			2000
			Sales revenue				2000
			(for sale of goods)
			Cost of goods sold Dr.			1100
			Merchandise Inventory				1100
			(for cost of godos sold)
			Accounts payable Dr.			1100
			Cash				1100
			(for paymentt of accounts payable)
3			Merchandise Inventory Account Dr.			1200
			Accounts payable				1000
			Cash Account				200
			(for purchase of inventory and frieght paid)
4			Service revenue Account Dr.			98000
			Interest revenue Account Dr.			2000
			Income Summary				100000
			(for closing the revenue)
			Income Summary Dr.			34000
			Salaries expense				24000
			Advertising expense				8000
			Utilities expense				2000
			(for closing expense)
			Income Summary Dr.			66000
			Retained earnings				66000
			(for transferring the net income)
			Retained earnings Dr.			4000
			Dividend Account				4000
			(for closing the dividend)
5		Sep 10 2016	Sales return and allowance Dr.			600
			Accounts receivable				600
			(for sales return)
			Merchandise Inventory			400
			Cost of Goods sold				400
			(for returned goods included in inventory)
		14-Sep	Cash Accoutn Dr.			2352
			Sales Discount Dr.			48
			Accounts receivable				2400