Question

On January 2, 2018 you started a business corporation named Ace Corporation. Business is slow, so you only have a few transactions during the year, and it appears you will make very little profit. Given the attached chart of Accounts and other worksheets you are required to enter the journal entries to record the transactions and post them to the ledger as they occur. At the end of the calendar year you will need to prepare a trial balance. You will also enter the adjusting journal entries, post the adjusting journal entries to the ledger and complete the adjusted trial balance. Next prepare the income statement for year ending December 31, 2018. Prepare the statement of stockholders' equity for year ending December 31, 2018. Enter the closing Journal entries and Post them to the ledger.

Requirement 1

Prepare the journal entries for the following transactions and post each journal entry to the ledger.

1. On January 2, 2018 Ace Corporation receives $300,000 cash from the stockholders and in turn issued common stock to them.

2. On January 2, 2018 Ace prepaid $39,000 cash to rent office space for 3 years.

3. On January 2, 2018 to furnish the office Ace purchased office furniture and equipment for $17,000 cash.

4. On February 1, 2018 Ace purchased inventory for $20,000 cash to sale to its customers.

5. On April 15, 2018 Ace recorded cash sales of $13,800.

6. On July 1, 2018 Ace obtains a 1-year loan from a local bank for $50,000. The bank is charging Ace interest at an annual percentage rate of 8%. Interest is payable January 1, 2019 and July 1, 2019.

7. On August 15, 2018 Ace recorded sales on account of $16,000.

8. On September 30, 2018 Ace received $8,000 cash for part of the sales on account recorded on August 15, 2018.

9. On November 15, 2018 Ace purchased $15,000 of inventory on account.

10. On December 1, 2018 Ace recorded cash sales of $17,500.

11. On December 10, 2018 Ace paid $14,000 cash for the $15,000 purchase of inventory on account on November 15, 2018.

12. On December 15, 2018 Ace paid $2,800 for a utility bill.

Answer 1

Ace Corporation
Journal entries
Date	Account	Debit	Credit
2-Jan	Cash	$   300,000
	Common Stock		$   300,000
2-Jan	Prepaid Rent	$     39,000
	Cash		$     39,000
2-Jan	Office furniture and equipment	$     17,000
	Cash		$     17,000
1-Feb	Inventory	$     20,000
	Cash		$     20,000
15-Apr	Cash	$     13,800
	Sales		$     13,800
2-Jul	Cash	$     50,000
	Notes Payable		$     50,000
15-Aug	Accounts Receivable	$     16,000
	Sales		$     16,000
30-Sep	Cash	$        8,000
	Accounts Receivable		$        8,000
15-Nov	Inventory	$     15,000
	Accounts Payable		$     15,000
1-Dec	Cash	$     17,500
	Sales		$     17,500
10-Dec	Accounts Payable	$     14,000
	Cash		$     14,000
15-Dec	Utility expense	$        2,800
	Cash		$        2,800