How do I figure out the journal entries and adjusting entries? I am lost.
Mason Automotive is an automotive parts company that sells car parts and provides car service to customers. This is Mason's rst 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 , 2019 was the rst 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 ll 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 rst journal entry for you in the journal entries tab and T-Accounts tab. Ensure you label the entries similar to how I have shown in Entry #1. Once all entries are recored and the T-Accounts tab is updated, please prepare the nancial statements (income statement and balance sheet) for the month of January. Journal Entry #1 Mason Automotive sells 10,000,000 shares at $1 par for $10 on January lst, 2019. Journal Entry #2 Ed Mason, the CEO, hires 4,500 employees, whom will receive a combined salary of $5.3 Million on a monthly basis. The employees started on January 1st and will be paid for the month of January on February 4th. Employee's withholdings are as follows: 12% for federal income taxes 5.5% for state income taxes and 8% for FICA. Record the necessary entry as of January ist, 2019. Journal Entry #3 On January lst, Mason Automotive receives $60 Million advance payment from a customer, Highland Inc., to manufacture 6,000 cars. Journal Entry #4 Mason Automotive issues a bond payable on January 1st, 2019 with a face value of $500 Million at 102. The bond will have a useful life of 10 years with an interest payment of 7.5% (Annual Percentage Rate) due at the end of the month. Record the necessary journal entry as of January lst, 2019. (Note: When considering the amortization of the discount or premium, assume the straight line method is used). Journal Entry #5 Mason Automotive purchased $6.0 Million dollars worth of supplies on account on January 2nd, 2019. Journal Entry #6 Mason Automotive purchased $157 Million dollars worth of inventory on January 2nd, 2019. $90 Million was paid with cash with the remaining balance on account. Mason notes that it will use a perpetual inventory system to track inventory. Journal Entry #7 On January 2nd, Mason Automotive shipped an order to Panther Paws Corporation. The shipping terms were FOB shipping point. The sales value of the order was $98 Million and the inventory cost was $51 Million. Assume that this sale was made on account. Journal Entry #8 Mason Automotive buys a patent from Apple for $24 Million on January 3rd, 2019. The patent has a legal life of 25 years and useful life of 20 years. Record the necessary entry as of January 3rd, 2019. Assume the patent was purchased using cash. Journal Entry #9 Mason Automotive prepays for Rent Expense for the next year of $12.6 Million and Insurance Expense of $4.2 Million on January 3rd, 2019. Journal Entry # 10 Mason Automotive purchases xed assets of $160 Million that will have a useful life of 15 years and a salvage value of $10 million on January 4th, 2019. $35 million was paid with cash with the remaining balance on account. These assets are depreciated using the straight-line method. Journal Entry # 11 On January 20th, Mason Automotive decides to purchase 400,000 shares of Treasury stock at $25 per share. M IlEiH' I' EI' There are 10 applicable adjusting entries that need to be made as of the end of the month based on the information provided above. When recording these adjusting entries consider the following facts: 1.) Interest expense will be recorded as 3 operating expense items on the income statement. 2.) Record the necessary adjusting entries related to pre-paid expense as separate journal entries. 3.) When reviewing the supply room as of the end of the month, Mason Automation noted that it had $3.2 Million worth of supplies still on hand. 4.) As of the end of the month, 2,500 cars were completed for Michael Scott Paper Company and the performance obligation had been met on those 2,500 cars. As such, revenue was determined to be earned on those 2,500 vehicles and it was noted that each vehicle costed $5,500 to manufacture. 5.) Mason Automation uses the balance sheet approach in estimating the allowance for doubtful accounts as of the end of the period. Based on industry average, Mason noted that it will use 4.5% of receivables as an estimation. 6.) When preparing the balance sheet, close out net income to retained earnings. Entry Number Date Debit Account Credit Account Debit Amount ($ Credit Amount ( Journal Entry #1 January ist 2019 Cash 100,000,000 Common Stock 10,000,000 Additional Paid in Capital 90,000,000 Journal Entry #2 January 1st 2019 Journal Entry #3 January 1st 2019 Journal Entry #4 January 1st 2019 Journal Entry #5 January 2nd 2019 Journal Entry #6 January 2nd 2019 Journal Entry #7 January 2nd 2019 Journal Entry #8 January 3rd 2019 Journal Entry #9 January 3rd 2019 Journal Entry #10 January 4th 2019 Journal Entry #11 January 20th, 2019 Journal Entry #12 January 31st, 2019 Journal Entry #13 January 31st, 2019
