Background Information Mason Automotive is an automotive parts company that sells car parts and provides car service to customers. This is Mason's first year of operations and they have hired you as their CPA to prepare the income statement and balance sheet for their company. As such, January 1st, 2023 was the first day that Mason was in business. For the month of January, record all the necessary journal entries for transactions that occurred during the month. In addition, please prepare all necessary adjusting journal entries as of the end of the month. From the information below, please fill out the 'Journal entries' tab for all the necessary journal entries. Furthermore, please complete the 'T-Accounts' tab for the individual accounts so that the 'trial balance' tab can be updated (automatically). I prepared the first journal entry for you in the journal entries tab and T-Accounts tab. Ensure you label the entries how I have for Entry 11 . Once all entries are recored and the T-Accounts tab is updated, please prepare the financial statements (income statement and balance sheet) for the month of January. JE \# Activity For The Month of January 1 Mason Automotive sells 7,350,000 shares at $6 par for $20 on January 1 st, 2023. 2 On January 3rd, Mason Automotive receives $39.6 Million advance payment from a customer, Highland Inc., to manufacture 6,820 cars. 3 Mason Automotive pre-pays for rent Expense for the next five years of $25 Million on January 1 st, 2023. Mason Automotive purchased \$162 Million dollars worth of inventory on January 5 th, 2023. \$79.2 Million 4 was paid with cash with the remaining balance on account. Mason notes that it will use a perpetual 11. inventory system to track inventory. 12 Mason Automotive buys a patent from Apple for $19.965 Million on January 1st, 2023. The patent has a legal 5 life of 22 years and useful life of 21 years. Record the necessary entry as of January 1st, 2023. Assume the 13 patent was purchased using cash. Mason Automotive issues a bond payable on January 1st, 2023 with a face value of $117 Million at 95 . The bond will have a useful life of 10 years with an interest payment of 9.25\% (Annual Percentage Rate) due at the end of the month. Record the necessary journal entry as of January 1st, 2023. Note: When considering the amortization of the discount or premium, assume the straight line method is used. Interest will be accrued on a monthly basis. On January 15th, Mason Automotive shipped two orders to Panther Paws Corporation. The shipping terms were FOB Destination. The first part of the delivery was received by Pather Paws on January 17 th with a sales 7 value of $178.2 Million and the inventory cost was $95.7 Million. The second part of the delivery was received on February 3rd with a sales value of $250 Million and an inventory cost of $175Million. Assume that this sale was made on account. 8 Mason Automotive purchased $8 Million dollars worth of supplies on account on January 27 th, 2023. Mason Automotive purchases fixed assets of $176 Million that will have a useful life of 14 years and a 9 salvage value of $55 million on January 1st, 2023. $70 million was paid with cash with the remaining balance on account. These assets are depreciated using the straight-line method. Ed Mason, the CEO, hires 3,870 employees, whom will receive a combined salary of $7.38 Million on a monthly basis. The employees started on January 1 st and will be paid for the month of January on February 6th. Employee's withholdings are as follows: 11% for federal income taxes 5.6% for state income taxes and 23 7.65\% for FICA. Record the necessary entry as of the date of hire, January 1 st, 2023. On January 30th, Mason Automotive decides to purchase 142,000 shares of Treasury stock at $22 per share. 11 25 26 27 Month End Adjusting Entries There are 10 applicable adjusting entries that need to be made as of the end of the month based on the 28 information provided above. When recording these adjusting entries consider the following facts: 291 Record the necessary adjusting entries related to pre-paid expense as separate journal entries. 302 Interest expense will be recorded as an operating expense item on the income statement. As of the end of the month, 4,620 cars were completed for Highland Inc. and the performance obligation had been met on those 4,620 cars. As such, revenue was determined to be earned on those 4,620 vehicles and it was noted that each vehicle costed $3,300 to manufacture. (These journal entries are considered 2 of the 10 31 3itotal adjusting entries). When reviewing the supply room as of the end of the month, Mason Automation noted that it had $3 Million! Select destination and Information Journal Entries T-Accounts (Trial Balance Income Statement B When reviewing the supply room as of the end of the month, Mason Automation noted that it had $3 Million 32 4iworth of supplies still on hand. 5 There should be two separate entries related to payroll that is recorded. Mason Automation uses the balance sheet approach in estimating the allowance for doubtful accounts as of the end of the period. Based on industry average, Mason noted that it will use 10% of receivables as an 6 estimation. Note on Balance Sheet: When preparing the balance sheet, close out net income to retained earnings. Background Information Mason Automotive is an automotive parts company that sells car parts and provides car service to customers. This is Mason's first year of operations and they have hired you as their CPA to prepare the income statement and balance sheet for their company. As such, January 1st, 2023 was the first day that Mason was in business. For the month of January, record all the necessary journal entries for transactions that occurred during the month. In addition, please prepare all necessary adjusting journal entries as of the end of the month. From the information below, please fill out the 'Journal entries' tab for all the necessary journal entries. Furthermore, please complete the 'T-Accounts' tab for the individual accounts so that the 'trial balance' tab can be updated (automatically). I prepared the first journal entry for you in the journal entries tab and T-Accounts tab. Ensure you label the entries how I have for Entry 11 . Once all entries are recored and the T-Accounts tab is updated, please prepare the financial statements (income statement and balance sheet) for the month of January. JE \# Activity For The Month of January 1 Mason Automotive sells 7,350,000 shares at $6 par for $20 on January 1 st, 2023. 2 On January 3rd, Mason Automotive receives $39.6 Million advance payment from a customer, Highland Inc., to manufacture 6,820 cars. 3 Mason Automotive pre-pays for rent Expense for the next five years of $25 Million on January 1 st, 2023. Mason Automotive purchased \$162 Million dollars worth of inventory on January 5 th, 2023. \$79.2 Million 4 was paid with cash with the remaining balance on account. Mason notes that it will use a perpetual 11. inventory system to track inventory. 12 Mason Automotive buys a patent from Apple for $19.965 Million on January 1st, 2023. The patent has a legal 5 life of 22 years and useful life of 21 years. Record the necessary entry as of January 1st, 2023. Assume the 13 patent was purchased using cash. Mason Automotive issues a bond payable on January 1st, 2023 with a face value of $117 Million at 95 . The bond will have a useful life of 10 years with an interest payment of 9.25\% (Annual Percentage Rate) due at the end of the month. Record the necessary journal entry as of January 1st, 2023. Note: When considering the amortization of the discount or premium, assume the straight line method is used. Interest will be accrued on a monthly basis. On January 15th, Mason Automotive shipped two orders to Panther Paws Corporation. The shipping terms were FOB Destination. The first part of the delivery was received by Pather Paws on January 17 th with a sales 7 value of $178.2 Million and the inventory cost was $95.7 Million. The second part of the delivery was received on February 3rd with a sales value of $250 Million and an inventory cost of $175Million. Assume that this sale was made on account. 8 Mason Automotive purchased $8 Million dollars worth of supplies on account on January 27 th, 2023. Mason Automotive purchases fixed assets of $176 Million that will have a useful life of 14 years and a 9 salvage value of $55 million on January 1st, 2023. $70 million was paid with cash with the remaining balance on account. These assets are depreciated using the straight-line method. Ed Mason, the CEO, hires 3,870 employees, whom will receive a combined salary of $7.38 Million on a monthly basis. The employees started on January 1 st and will be paid for the month of January on February 6th. Employee's withholdings are as follows: 11% for federal income taxes 5.6% for state income taxes and 23 7.65\% for FICA. Record the necessary entry as of the date of hire, January 1 st, 2023. On January 30th, Mason Automotive decides to purchase 142,000 shares of Treasury stock at $22 per share. 11 25 26 27 Month End Adjusting Entries There are 10 applicable adjusting entries that need to be made as of the end of the month based on the 28 information provided above. When recording these adjusting entries consider the following facts: 291 Record the necessary adjusting entries related to pre-paid expense as separate journal entries. 302 Interest expense will be recorded as an operating expense item on the income statement. As of the end of the month, 4,620 cars were completed for Highland Inc. and the performance obligation had been met on those 4,620 cars. As such, revenue was determined to be earned on those 4,620 vehicles and it was noted that each vehicle costed $3,300 to manufacture. (These journal entries are considered 2 of the 10 31 3itotal adjusting entries). When reviewing the supply room as of the end of the month, Mason Automation noted that it had $3 Million! Select destination and Information Journal Entries T-Accounts (Trial Balance Income Statement B When reviewing the supply room as of the end of the month, Mason Automation noted that it had $3 Million 32 4iworth of supplies still on hand. 5 There should be two separate entries related to payroll that is recorded. Mason Automation uses the balance sheet approach in estimating the allowance for doubtful accounts as of the end of the period. Based on industry average, Mason noted that it will use 10% of receivables as an 6 estimation. Note on Balance Sheet: When preparing the balance sheet, close out net income to retained earnings