Question
D- On November 1, 2018, Accounting Creations loaned a key supplier, $25,000. A promissory note was signed and issued. The note is due in full
D- On November 1, 2018, Accounting Creations loaned a key supplier, $25,000. A promissory note was signed and issued. The note is due in full 6-months. The supplier agrees to pay interest on the note at an annual rate of 3%. Principle and interest will be paid at the end of the 6-months. The note was recorded in Notes Receivable and is the only note outstanding.
E- Per a physical count of office supplies, $5,615 of supplies remained at the end of 2018. The balance on the worksheet in the office supplies account represents last years ending balance. During the year, $35,000 of office supplies were purchased and immediately expensed.
F- On November 1, 2018 Accounting Creations paid ABC Advertising $16,000 for a four-month campaign of advertising services. Equal services are provided each month.
Accounting Creations was authorized to issue 3,000,000 shares of $1 par Common Stock but has only issued 650,000 shares of common stock as of 12/31/2018. No new shares were issued during 2018.
1. On the Adjusting Journal Entries worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2018. (Round all numbers to the nearest dollar). Label journal entries a through t.
Accounting Creations Incorporated | ||||||
End of Period Worksheet | ||||||
For the Year Ended December 31, 2018 | ||||||
Unadjusted | Adjusted | |||||
Account Title | Trial Balance | Adjustments | Trial Balance | |||
DR | CR | DR | CR | DR | CR | |
Cash | 330,000 | - | ||||
Accounts Receivable | 694,980 | - | ||||
Allowance for Doubtful Accounts | - | 17,000 | ||||
Interest Receivable | - | - | ||||
Merchandise Inventory | 425,000 | - | ||||
Prepaid Insurance | - | - | ||||
LIFO Reserve | - | 32,000 | ||||
Prepaid Advertising | - | - | ||||
Prepaid Rent | 17,000 | - | ||||
Office Supplies | 6,000 | - | ||||
Note Receivable | 25,000 | |||||
Available for Sale Securities | 375,000 | - | ||||
Office Building | 3,750,000 | - | ||||
Accumulated Depreciation - Office Building | - | 87,500 | ||||
Storage Building | 1,275,000 | - | ||||
Accumulated Depreciation - Storage Building | - | - | ||||
Land | 750,000 | - | ||||
Leasehold Improvements | 225,000 | - | ||||
Accumulated Depreciation - Leasehold Improvements | - | - | ||||
Office Equipment | 325,000 | - | ||||
Accumulated Depreciation - Office Equipment | - | 65,000 | ||||
Patent | 150,000 | - | ||||
Accounts Payable | - | 345,000 | ||||
Sales Tax Payable | - | - | ||||
Salaries Payable | - | 142,000 | ||||
Payroll Taxes Payable | - | 25,000 | ||||
Interest Payable | - | - | ||||
Income Tax Payable | - | - | ||||
Unearned Rent Revenue | - | - | ||||
Loan Payable - Onstar Bank | - | 650,000 | ||||
Loan Payable - Coldstar Bank | - | 2,000,000 | ||||
Common Stock | - | 650,000 | ||||
Additional Paid in Capital | - | 1,998,750 | ||||
Retained Earnings | - | 920,000 | ||||
Accumulated Other Comprehensive Income | - | 25,000 | ||||
Dividends | 84,750 | - | ||||
Sales | - | 4,528,200 | ||||
Sales Returns and Allowances | 42,250 | - | ||||
Sales Discounts | 19,250 | - | ||||
Cost of Goods Sold | 1,979,500 | - | ||||
Sales Salaries Expense | 436,400 | - | ||||
Office Salaries Expense | 274,000 | - | ||||
Advertising Expense | 16,000 | - | ||||
Depreciation Expense - Office Building | - | |||||
Depreciation Expense - Leasehold Improvements | - | - | ||||
Depreciation Expense - Office Equipment | - | - | ||||
Leasing Expense - Stores | 132,000 | - | ||||
Miscellaneous Selling Expense | 23,000 | - | ||||
Research & Development Expense | 15,000 | |||||
Rent Expense - Storage Facility | - | - | ||||
Insurance Expense | 15,000 | - | ||||
Office Supplies Expense | 35,000 | - | ||||
Miscellaneous Administrative Expense | 9,170 | - | ||||
Rent Revenue | - | 75,000 | ||||
Interest Revenue on Note Receivable | - | - | ||||
Dividend Revenue on AFS Securities | - | 25,000 | ||||
Interest Expense | - | - | ||||
Bad Debt Expense | 35,000 | - | ||||
Amortization Expense | - | - | ||||
Income Tax Expense | - | - | ||||
Payroll Taxes Expense | 121,150 | - | ||||
11,585,450 | 11,585,450 |
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