In: Accounting
Please fill out a general journal for the transactions.
Customers are charged $87 per hour for services
Customers are charged $75 for each unit of retail product purchased
Inventory is purchased by the company for $36 per unit
Trans. |
Date |
Description |
1 |
Dec. 1 |
Borrow $115,000 from the local bank and signed a six-year installment note with payments of $1,905 at the end of each month. The annual interest rate is 6%. Current portion of Note at year end after December payment = 16,500 |
2 |
Dec. 1 |
Purchased a building for $56,000. Paid $2,000 in attorney fees, $4,000 in remodeling costs to get the building ready for use. The building has a 25-year useful life with residual value of $2,000. |
3 |
Dec. 1 |
Sold $4,350 worth of gift cards in opening celebration for services to be provided in December. The gift cards expire at the end of the month. |
4 |
Dec. 1 |
Sell 16,000 shares of no-par value common stock for $6 per share to obtain the funds necessary to start your business. |
5 |
Dec. 1 |
Purchase 400 units of inventory on account with terms 3/10 net 30. |
6 |
Dec. 1 |
Purchase a vehicle necessary for business operations for $21,000 cash. The vehicle has a five year life with a residual value of $3,000. |
7 |
Dec. 1 |
Pay $6,000 for one year of insurance in advance. |
8 |
Dec. 3 |
Sell 200 units of inventory to a customer who signs a 6-month promissory note at 6% with interest and principal due at maturity. perpetual method = 2 entries |
9 |
Dec. 3 |
Purchase Supplies on account, $3,200. |
10 |
Dec. 6 |
Provide 40 hours of services to customers who pay with gift cards (calculate using your hourly service rate) no terms specified. |
11 |
Dec. 8 |
Company pays invoice for inventory purchased on December 1st within discount terms. |
12 |
Dec. 10 |
Purchase an additional 240 units of inventory for cash. |
13 |
Dec. 12 |
Sell 100 units of inventory to a customer on account with a sales discount of 2/10, n/30. (Perpetual method= 2 entries) |
14 |
Dec. 20 |
The customer who purchased product on December 12th pays the amount due (within discount period). |
15 |
Dec. 23 |
Sell 180 units of inventory on account. (Perpetual method = 2 entries) |
16 |
Dec. 31 |
Record the of $1,905 installment payment on the $115,000 installment note borrowed on December 1st. The annual interest rate is 6%. |
17 |
Dec. 31 |
Pay employee salaries, $4,000. |
18 |
Dec. 31 |
Pay cash dividends to shareholders of $0.10 per share. |
19 |
Dec. 31 |
Vehicle did not meet expectations sold to another company for $23,000. (Record depreciation at date of sale and then record sale). |
Journal entries:
Date | Account title and explanation | Debit | Credit | |
1 | Dec.1 | Cash | $115,000 | |
Notes payable | $115,000 | |||
[To record borrowing in exchange of notes] | ||||
2 | Dec.1 | Buildings | $62,000 | |
Cash | $62,000 | |||
[To record purchase of buildings] | ||||
3 | Dec.1 | Cash | $4,350 | |
Unearned revenue | $4,350 | |||
[To record sale of gift cards] | ||||
4 | Dec.1 | Cash | $96,000 | |
Common stock [16,000 x $6] | $96,000 | |||
[To record issuance of common stock] | ||||
5 | Dec.1 | Inventory | $14,400 | |
Accounts payable [400 x $36] | $14,400 | |||
[To record purchase of inventory on account] | ||||
6 | Dec.1 | Vehicle | $21,000 | |
Cash | $21,000 | |||
[To record purchase of vehicle] | ||||
7 | Dec.1 | Prepaid insurance | $6,000 | |
Cash | $6,000 | |||
[To record payment of insurance for one year in advance] | ||||
8 | Dec.3 | Notes receivable | $15,000 | |
Sales revenue [200 x $75] | $15,000 | |||
[To record sales revenue] | ||||
Cost of goods sold | $7,200 | |||
Inventory [200 x $36] | $7,200 | |||
[To record cost of goods sold] | ||||
9 | Dec.3 | Supplies | $3,200 | |
Accounts payable | $3,200 | |||
[To record purchase of supplies on account] | ||||
10 | Dec.6 | Unearned revenue | $3,480 | |
Service revenue [40 hours x $87] | $3,480 | |||
[To record service revenue] | ||||
11 | Dec.8 | Accounts payable | $14,400 | |
Cash | $13,968 | |||
Inventory [14,400 x 3%] | $432 | |||
[To record payment for accounts payable] | ||||
12 | Dec.10 | Inventory | $8,640 | |
Cash [240 x $36] | $8,640 | |||
[To record purchase of inventory by cash] | ||||
13 | Dec.12 | Accounts receivable | $7,500 | |
Sales revenue [100 x $75] | $7,500 | |||
[To record sales revenue] | ||||
Cost of goods sold | $3,600 | |||
Inventory [100 x $36] | $3,600 | |||
[To record cost of goods sold] | ||||
14 | Dec.20 | Cash | $7,350 | |
Sales discount [7,500 x 2%] | $150 | |||
Accounts receivable | $7,500 | |||
[To record collections from customers] | ||||
15 | Dec.23 | Accounts receivable | $13,500 | |
Sales revenue [180 x $75] | $13,500 | |||
[To record sales revenue] | ||||
Cost of goods sold | $6,480 | |||
Inventory | $6,480 | |||
[To record cost of goods sold] | ||||
16 | Dec.31 | Notes payable | $1,330 | |
Interest expense [115,000 x 6% x (1/12)] | $575 | |||
Cash | $1,905 | |||
[To record installment payment on note ] | ||||
17 | Dec.31 | Salaries expense | $4,000 | |
Cash | $4,000 | |||
[To record payment of salaries expense] | ||||
18 | Dec.31 | Cash dividends | $1,600 | |
Cash [16,000 x $0.10] | $1,600 | |||
[To record payment of cash dividends] | ||||
19 | Dec.31 | Cash | 23000 | |
Depreciation expense [(21,000-3,000)/5] x 1/12 | $300 | |||
Vehicle | $21,000 | |||
Gain on sale of vehicle | $2,300 | |||
[To record sale of vehicle] | ||||