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I just need help on calculating the adjusting entries being made. Thank you. BEACON LUMBER, MONTH OF DECEMBER Dec1 Beacon purchases a general liability insurance
I just need help on calculating the adjusting entries being made.
Thank you.
BEACON LUMBER, MONTH OF DECEMBER Dec1 Beacon purchases a general liability insurance policy for $1,200, paying cash. The term of the policy is one year, from Dec 1, 2009 through Nov 30, 2010. Dec1Beacon purchases a forklift for $10,000, paying half in cash and half with a5 year, 12% note. The forklift is a well made American Machine & Foundry product, and it is expected to last for 10 years. Dec 1Beacon purchases office equipment for S2,000, paying cash. The equipment has an expected life of 5 years. Dec3 Beacon purchases 30,000 bd. ft. of lumber from BWLC for $27,000. Again, after reaching its credit limit it paid cash for the remaining amount. Dec 3 On this day Beacon sent a check to pay for Decem s rent for the office trailer. Dec 6 Beacon signs a contract with SCORE Construction to have a warehouse built on its property. The warehouse will cost $20,000. Beacon will pay SCORE by issuing S10,000 worth of stock, paying $5,000 in cash and issuing a note for the balance. Dec 6 Beacon pays $300 for three months of advertising on a web site. The ad will run from Dec 15, 2009 through March 15,2010. Dec 6 The sister of investor #2 purchases the balance of investor #2's Beacon stock for $3,000 (see General Journal, Nov 15). Dec7 Beacon pays the lawyer's bill received on Nov 4. Dec 15 Mark Peltz, a local sculptor, agrees to rent 1 acre of land at the rear of Beacon's lot to use as an outdoor studio. He pays $600 for 4 months rent. The lease will start on Dec 15. Dec 15 On this day Beacon sells 3 acres of land for $15,000. It receives S5,000 in cash and a mortgage note for the rest. The note cames interest at 10% and the principal amount is due in 8 years. Assume that all the land had a uniform cost per acre when it was purchased by Beacon. Dec 18 The office manager purchases $250 worth of office supplies. Use account #728 (Office Supplies Expense) to record the purchase. Beacon pays cash. Dec 29 Girl Scouts sneak into the lot Friday night and start a campfire. The fire gets out of control and destroys $1,800 worth of inventory. (In order to avoid embarrassment to the Girl Scouts, the company does not file charges with the police or make an insurance claim. Instead it asks the Girl Scouts to perform 200 hours of community service.) Dec 29 The Board of Directors declares a cash dividend of S.05 per share, payable in January. (Hint: Use the dividends and dividends payable common stock accounts.) Verify that the amount of the dividends (the product of the number of shares issued and the amount per share) equals $2,000. Dec 30 This is the last payday for the month of December. The next payday will occur in January. Payroll checks for the month of December total $5,248. (For the time being you can ignore taxes. We will examine this topic later in the course.) Dec 31 Total sales on account for the month of December were S45,600. Beacon sold all merchandise at a uniform selling price of S1.60 per board foot. should be able to use this information to calculate the COGS entry.) (Hint: you Dec31 By the end of the month Beacon had collected cash payments from its account holders of S36,700. Required Adjusting Entries for December A1 The two yard personnel and the office manager worked on Dec. 29, 30 and 31. On December 30th they were paid for work through the 28th. The yard hour. All employees work an eight-hour day. A review of the office supplies locker shows that $180 worth of supplies are el are paid S12.00 per hour and the office manager receives $17.00 per A2 on hand. Compute and record the insurance expense for the month of December. Assume that the insurance coverage expires at an even rate throughout the year. Refer to the general journal for Dec 1 and verify that the expense should equal $100. A4 Compute and record depreciation on the forklift acquired on Dec 1. Assume that usage will occur at an even rate over the life of the machine, so that 1/120th of its original cost will be depreciated each month. A5 Compute and record depreciation on the office equipment acquired on Dec l. Use the same method for this equipment as you did for the forklift. How will the shorter life (five years for the office equipment as opposed to ten for the forklift) affect your calculation? A6 Compute and record the advertising expense for the month of December. As always, pay careful attention to all dates. A7 Compute and record the rental revenue from sculptor Mark Peltz. A8 Compute and record the accrued interest revenue on the note received as partial payment for the 3 acres of land sold earlier in the month. A9 Compute and record all the accrued interest expense on (a) the note given tStep by Step Solution
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