Question
I need help with the following two problems. I know it's really long of a question, but it is just journal, so if you understand
I need help with the following two problems. I know it's really long of a question, but it is just journal, so if you understand those well, I really need the help because I am not confident in my answers at all.
Journal Entry List Record entries from the transaction and event list provided below in proper journal entry format. NOTE: You are recording entries for the fiscal year 2019 (Jan 1 Dec 31). This list must be organized. Make sure that I can easily identify the journal entry or adjusting journal entry with the related transaction/event. Show your work if the entry requires you to make a calculation (i.e. depreciation, interest expense, etc.).
January - On January 1st, The Board of Directors issued 240,000 additional shares (par of $.25) to raise capital for the New Year. Assume no change in price from Dec 31, 2018. -Purchased a truck for $270,000 cash on the 1st of January. The truck will be depreciated over an 8 year period. You decide to use the 200% declining-balance depreciation method because it is determined that the truck will be more productive when it is newer. The truck has an estimated salvage value of $25,000. [Adjusting Entry Required] - Purchased new office equipment for $95,000 with cash from California Furniture on January 1, 2019. The new furniture will be depreciated over a ten-year period on a straight-line basis. The cabinet has an estimated salvage value of $4,000. [Adjusting Entry Required] - On January 1st, a 5 year, $140,000 long-term note payable was taken from a local bank. - On January 5th you receive payment from interest earned and accrued in 2018. - On January 22nd you purchased 8,500 additional units of inventory at a cost of $77 per unit. You paid 45% in cash and purchased the remainder on account. - On January 25th you pay $270,000 cash toward your accounts payable. February - Paid cash for $43,500 worth of radio advertising on February 1st. This gives you radio advertising space until January 31st, 2020. [Adjusting Entry Required] - February 13th you collect $364,000 of account payments from customers. March -Purchased a parcel of land on March 1, 2019 for $950,000 by paying $490,000 in cash and signing a short-term note payable with the seller for $460,000. You must repay the $460,000 in exactly one year on March 1, 2020. You agree to pay the seller 5 percent interest (annual rate) on a quarterly basis (June 1, September 1, December 1, 2019, and March 1, 2020). [Adjusting Entry Required] - On March 19th you purchased $26,000 of office supplies from Super Office Supplies with cash. - On March 20th you received a payment of $38,000 for 200 hours of service to be performed in the future. April - April 21st, your customers bought 15,000 units of your product for $126 per unit (you decide what your company sells). The cost of this product is determined by the method of inventory valuation used by your company. Customers paid you 55% in cash and the remainder was on account. - On April 27nd you purchased 9,250 units at a cost of $79 per unit. You paid 70% in cash and purchased the remainder on account. - On April 29th you pay $520,000 cash toward your accounts payable. May - On May 1st you pay all dividends owed to your owners. June - Leased additional warehouse space from Leasing Solutions for two years on June 1st due to expiration of the previous rental contract. $72,000 cash was paid for the new contract on this date which covers the rental fee for two years. There is no value left in the previous contract. [Adjusting Entry Required] - Wage expenses from January 1 June 30 $494,000. Pay this in full including your beginning balance in wages payable. - On June 19th, $132,000 of prepaid insurance was used. - On June 26th a customer that previously bought your product on account has filed for bankruptcy. He owed you $51,500. You expect to collect $0. July - Your company issued 1,000, 3.4% bonds (face value of each bond is $1,000) at 97.7485 on July 1st, 2019. The bonds are due on July 1, 2024, with interest payable each January 1 and July 1. The market rate at the time of the bond issuance was 3.9 Percent. Use the effective-interest method to calculate both the interest expense and the amortization of the bond discount when each interest payment is made. [Adjusting Entry Required] August - Purchased a Patent (Intangible Asset) for $76,000 on August 1st. The patent will be amortized over a 10 year period on a straight-line basis. [Adjusting Entry Required] - On August 6th, a piece of land that was originally purchased for $1,150,000 was sold for $2,100,000 cash. - August 15th, your customers bought 9,000 units of your product at $128 per unit. The cost of this product is determined by the method of inventory valuation used by your company. Customers paid you 45% in cash and the remainder was on account. - Received on August 25th a $129,000 cash payment from a customer paying on their account. September - $51,000 cash was paid for an investment in Company X's marketable securities on September 3rd. -On September 12th, a piece of equipment was sold for $760,000 cash. The equipment was originally purchased for $570,000. At the time of the sale, it had been depreciated by $70,000. - Purchased and used $11,400 worth of fuel for the delivery truck on September 18th. October - Your top sales officer met with a new customer to discuss a potential future contract. She informs you that the customer is considering signing the $250,000 deal, which would become effective February 2020. - On October 1st, you purchased 11,250 units at the increased price of $78.50 per unit. The purchase was made on account. - On October 10th you paid your supplier $96,000 cash for inventory purchased on account. November - November 1st, the CEO, in an effort to adjust ratios, ordered the repurchasing of the companys own stock. The quantity of stock repurchased was 170,000 shares. - Purchased a two-year building insurance policy on November 1st for $335,000 cash. [Adjusting Entry Required] - On November 17th a customer pays you $561,000 for work that you will finish in January of 2020. - November 19th, your customers bought 8,650 units of your product at $128 per unit. The cost of this product is determined by the method of inventory valuation used by your company. Customers paid you 45% in cash and the remainder was on account. - An employment contract is signed with a new regional manager. You have offered him $140,000 per year. He will not begin working for the company until March 2020. December - Wages earned from July 1st through December 31st was $532,000. Wages earned between Dec. 15th and Dec 31st amounting to $41,000 was not paid this until Jan 7th. - At the end of the year, $54,000 cash was paid to the local bank for the long-term note payable taken out on January 1, 2019. $45,000 of this was applied to the loan principal. The remaining amount was the accumulated interest due for 2019. - On December 31st, the marketable (trading) securities you purchased on September 23, 2019 transaction now has a fair market value of $67,000. - On December 31st, $517,000 depreciation expense for the year was calculated for equipment purchased before January 1, 2019. - On December 31st, you declare dividends of $.24 per share to be paid at a later date. - On December 31st, the utility bill was paid for the year. The amount was $52,000 and you paid in cash. - On December 31st, you pay in cash recurring interest on the long-term note acquired prior to the year 2017. HINT: See prior year financial statements. - On December 31st, your company earned interest on the average 2019 cash balance which will be paid January 5th, 2020. The average interest rate for the year was 4.0%. Note: Compute the average cash using only the beginning and ending balance. - By December 31st, 135 of the prepaid service hours from March 20, 2019 were completed. - A count of office supplies indicated that $15,400 of office supplies had been used by December 31st. - Since the inception of your company, you have been able to collect 88% of your ending accounts receivable balance from customers that bought your product on account. Based on this information, adjust your allowance for bad debt account. NOTE: Use your 2019 ending accounts receivable balance to make this calculation.
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