Question

Create a Journal entry

11/1/18	Dixie Iron Works, Inc. (the latest and greatest place to pump iron from Exam 1) is opening a new location and creating a new entity.
	The new location/entity will be called Dixie Iron Works II, LLC, and will primarily sell their special, patented nutritional supplement.
	This new business model will provide a larger customer base, as the supplement can be sold to other retailers as well as individuals.
11/1/18	Shareholders invest $100,000 in exchange for common stock in Dixie Iron Works II, LLC.
11/1/18	Pay $12,000 to register the patent on their specially forumlated nutritional supplement.
	Patents are amortized over 20 years.
11/1/18	Rent office  space on a monthly contract.  Pay $2,500 cash for November's rent.
11/1/18	Purchase a company vehicle for $15,000 cash.  The vehicle will be used by Dixie Iron Works II, LLC
	for 2 years. At the end of the two years it is estimated that the vehicle will be worth $6,000.
	The vehicle will be depreciated using the straight-line depreciation method.
11/5/18	Purchase 2,000 units of Dixie Iron Works II's special created supplement from their supplier.
	The cost per unit is $21.
	The supplements are purchased on account, terms 5/10n30.
	The supplements are purchased FOB Shipping point, and ship on 11/5/18.
11/10/18	The supplements arrive at Dixie Iron Works II's location.
11/11/18	Dixie Iron Works II pays for the supplements in full.
11/12/18	Dixie Iron Works II pays $2,100 for shipping the supplement order.
11/15/18	1,750 units of supplements are sold to The Summit Athletic Club for $36 each.
	The supplements are paid for at the time of sale.
11/15/18	Fearing a shortage of inventory, Dixie Iron Works II purchases an additional 1,000 supplements from their supplier.
	The cost per unit is $19, because they are purchased using cash, (same day shipping).
11/16/18	50 units of supplements are returned to Dixie Iron Works II.
	The product is undamaged and can be resold.
11/17/18	10 units of supplements are sold on account to a personal trainer for $40 each.
	Dixie Iron Works II uses the LIFO inventory cost method.
11/20/18	1,100 units of supplements are sold to a local cross-fit gym for $35 each.
	The supplements are paid for at the time of the sale.
	Dixie Iron Works II uses the LIFO inventory cost method.
11/30/18	A physical inventory is conducted and only 185 units of inventory are on hand.
11/30/18	Someone claims to have became ill from one of Dixie Iron Works II's supplements.
	Brand image is hurt. The supplement's current market price drops to $15 per unit.
	Perform a LCM adjustment.
11/30/18	Dixie Iron Works II, LLC learns that the personal trainer who purchased 10 supplements won't be able
	to pay for his account in full.
	One half of his account is written off.
11/30/18	Record deprecation for the vehicle and amortization on the patent.
11/30/18	Dixie Iron Works II, LLC determines that 5% of all sales on account will be uncollectible.
	(Hint: ending Allowance account balance should be 5% of ending A/R balance).

Answer 1

Date	Transaction	J/E	Dr/Cr	Amount Dr	Amount Cr
11-01-2018	Shareholders investment	Bank Account	Dr	100000
		Equity Share Capital A/c	Cr		100000
		(Being amount invested by Shareholders)
11-01-2018	Registration of Patent	Patent A/c	Dr	12000
		Bank Account	Cr		12000
		(Amount paid toward Registration of Patent)
11-01-2018	Rent paid	Rent Account	Dr	2500
		Bank Account	Cr		2500
		(Being Rent paid for the month of November)
11-01-2018	Purchase of Vehicle	Fixed Asset A/c	Dr	15000
		Bank Account	Cr		15000
		(Being Vehicle purchased)
11-01-2018	Purchase of material	Purchase A/c	Dr	42000
		Sundry Creditor A/c	Cr		42000
		(Being material purchased 2000 Qty @ $21)
11-11-2018	Payment of purchase of Material	Sundry Creditor A/c	Dr	42000
		Bank Account	Cr		42000
		(Being payment made against purchase of material)
11-12-2018	Shipping charges of material	Shipping Charges	Dr	2100
		Bank Account	Cr		2100
		(Being shipping charges paid on purchase of material)
11/15/18	Sale of Goods	Bank Account	Dr	63000
		Sales Account	Cr		63000
		(Being goods sold in cash 1750 qty@$36 )
11/15/18	Purchase of Goods	Purchase A/c	Dr	19000
		Bank Account	Cr		19000
		(Being goods purchased in cash 1000 qty @ $19)
11/16/18	Sale Return	Sale Return a/c	Dr	1800
		Bank Account	Cr		1800
		(Being sold goods returned by customers 50 qty @ 36)
11/17/18	Sale of Goods	Sundry debtors a/c	Dr	400
		Sales Account	Cr		400
		(Being goods sold on credit 10 aqty @ 40)
11/17/18	Sale of Goods	Sundry debtors a/c	Dr	38500
		Sales Account	Cr		38500
		(Being goods sold in cash 1100 qty @ 35)
11/30/18	Loss due to shortage	Loss by theft A/c	Dr	105
		Purchase A/c	Cr		105
		(Being 5 units lost due to theft Purchase=2000+1000 Add Sale return=50 Total 3050 Less-sales=1750+10+1100) Balance should be 190 Actual 185 , loss of 5 units)
11/30/18	Loss Due to reduction of Sale price	Loss due to Reduction in recoverable price	Dr	1110
		Purchase A/c	Cr		1110
		(Loss due to reduction is sale price i.e 185 X (21-15), As LIFO method is in effect oldest stock would be in balance)
11/30/18	Bad Debts	Bad Debts a/c	Dr	200
		Sundry debtors a/c	Cr		200
		(Being 50 % of goods sold become bad debt of personal trainer)
11/30/18	Amortization of patent	Amortization A/c	Dr	600
		Patent A/c	Cr		600
		(Amortization of Patent in 20 equal installment)
11/30/18	Depreciation of Vehicle	Depreciation A/c	Dr	4500
		Fixed Asset A/c	Cr		4500
		(Being Depreciation charged on Vehicle )
11/30/18	Provision for Bad Debt	Provision for bad debt a/c	Dr	10
		Sales A/c	Cr		10
		(Being provision made for bad debts, only credit sale is balance of physical trainer i.e of sale of 400 $, Half of which has been written off as Bad Debt . Only 200 remains in balance 5% of this is 10 $ is provision of Bad Debts)