Assets

Cash $500,000

Accounts Receivable 700,000

Inventory 300,000

Property, Plant & Equipment 900,000

Accumulated Depreciation (100,000) 800,000

Total Assets $2,300,000

Liabilities & Equity

Accounts Payable $300,000

Notes Payable 1,000,000

Common Stock 500,000

Retained Earnings 500,000

Total Liabilities & Equity $2,300,000

Journal Entries for January 2013

Transaction 1: Services Provided for Cash

Description: Receives $155,000 cash from customers for programming services it has provided.

Journal Entry: Dr. Cr.

Cash 155,000

Sales 155,000

Transaction 2: Receipt of Cash on Account

Description: Receives $28,000 in cash from customers who had been billed for services.

Journal Entry: Dr. Cr.

Cash 28,000

Accounts Receivable 28,000

Transaction 3: Cost Flow Assumption: LIFO

Description: Recorded $45,000 in cost of goods sold under the LIFO cost flow assumption.

Journal Entry: Dr. Cr.

Cost of Goods Sold 45,000

Inventory 45,000

Transaction 4: Recording Depreciation Expense

Description: Recorded depreciation expense under the straight-line method.

Journal Entry: Dr. Cr.

Depreciation Expense 9,000

Accumulated Depreciation 9,000

Transaction 5: Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was equal to the book value.

Journal Entry: Dr. Cr.

Cash 3,000

Accumulated Depreciation 16,000

Equipment 19,000

Transaction 6: Gain on Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was $2,000 more than the book value resulting in a gain.

Journal Entry: Dr. Cr.

Cash 5,000

Accumulated Depreciation 16,000

Gain 2,000

Equipment 19,000

Transaction 7: Loss on Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was $500 less than the book value resulting in a loss.

Journal Entry: Dr. Cr.

Cash 2,500

Loss 500

Accumulated Depreciation 13,000

Equipment 16,000

Transaction 8: Note Given to Borrow from Bank

Description: Borrowed $2,000 cash with a 60-day, 12%, $2,000 note.

Journal Entry: Dr. Cr.

Cash 2,000

Notes Payable 2,000

Transaction 9: Payment of Note

Description: Paid the principal and interest on the note in Transaction 8.

Journal Entry: Dr. Cr.

Notes Payable 2,000

Interest Expense 40

Cash 2,040

Transaction 10: Bond Issue

Description: Issued a $100,000 Par Value Bond at a Discount

Journal Entry: Dr. Cr.

Cash 96,454

Bonds Payable 96,454

Transaction 11: Effective Interest Amortization

Description: Recorded bond interest expense under the effective interest method.

Journal Entry: Dr. Cr.

Bond Interest Expense 4,823

Bonds Payable 823

Cash 4,000

Transaction 12: Issuing Par Value Stock at a Premium

Description: Issued common stock and received cash of $50,000 in excess of par value.

Journal Entry: Dr. Cr.

Cash 350,000

Common Stock , $10 Par Value 300,000

Paid-in Capital in Excess of Par Value, Common Stock 50,000

Transaction 13: Dividend

Description: The corporation pays a dividend of $3,800 in cash to the stockholders of Softbyte.

Journal Entry: Dr. Cr.

Dividends 3,800

Cash 3,800

5. What is the amount of total assets as of January 31, 2013?

A. $2,462,995

B. $2,655,235

C. $2,841,114

D. $2,935,755

6. What is the ending retained earnings balance?

A. $575,713

B. $581,972

C. $593,837

D. $615,245

7. What is the amount of net income?

A. $90,468

B. $92,743

C. $97,637

D. $99,645

8. What is the amount of total expenses and losses?

A. $55,455

B. $57,924

C. $59,363

D. $61,455