Question

1. The Children’s Museum (CM) had the following highly summarized financial events during the current year:

A. Jan. 2        Ordered new equipment with a 10-year life, for $80,000. No payment was made and the equipment has not been delivered.

B. Jan. 14     Received a $100,000 payment on a pledge that had been made three years ago.

C. Feb. 19     Bought $35,000 of books and posters that will be sold in the museum store. Only $20,000 was paid for the inventory on that date, and the balance is owed to the suppliers. CM expects to be able to sell the inventory for $60,000.

D. May 15     Paid a $30,000 deposit for the equipment ordered on January 2.

E. July 12      Received the equipment ordered on January 2, and mailed a check for the balance due.

F. Dec.28      Admission fees for the year were $74,000. They were all collected.

G. Dec.28     CM paid its employees $68,000 of wages. Wage expense for the year is $73,000. The payment included the $2,000 wages payable balance outstanding from the previous year plus some payment for work done this year.

H. Dec.30     Book and poster sales for the year totaled $53,000. All but $3,000 of that amount has been collected. The entire $6,000 balance in accounts receivable from beginning of the year was also collected. The cost of the books and posters sold was $32,000.

I. Dec.31       CM makes a payment of $134,000 on its long-term note. That amount includes interest expense of $7,000.

J. Dec.31       The museum’s building and equipment are now one year older. Depreciation for the year is $60,000.

K. Dec.31     CM estimates that $1,000 of the receivables for book and poster sales made this year will never be collected.

Record these transactions and any other required adjusting entries, by showing either their impact on the fundamental equation of accounting or journal entries.

Answer 1