In 2018, after a condiment tragedy takes out his favorite tie, Cornelius, Barney Stinson, came up with an idea to keep his bros from meeting a similar fate while putting on a lobster bib- BroBibs! Suitable for wearing over suits and other bro clothing, several examples such as the Business Casual, the Preppy, and the Robin Williams, were shown during a sales pitch on BroBibs.com. The following balance sheet and income statement is for the year ended December 31, 2018.

Assets		Liabilities and Shareholders Equity
Cash	$14,000	Accounts Payable	$18,000
Accounts Receivable	15,000	Unearned Revenue	12,000
Inventory	13,000	Contributed Capital- C/S ($1 Par Value, 100,000 shares authorized, 5000 shares issued, 5000 shares outstanding, 0 shares in Treasury Stock)	5,000
Prepaid Rent (paid for 3 years)	12,000	Additional Paid In Capital- C/S	20,000
Trademark	10,000	Retained Earnings	9,000
TOTAL	64,000	TOTAL	64,000

Income Statement
Sales	$20,000
Less: COGS	5,000
Gross Profit	$15,000
Operating Expenses
Rent Expense	6,000
Net Income	$9,000

Additional Information

Barney pays $1 for each BroBib and sells each for $4. At the end of 2018, he has 13,000 bibs in inventory- and a shipment for 3,000 bibs scheduled to be delivered the following year to customers who have paid him in advance.

The trademark was purchased on December 31, 2018, and as such no amortization expense was recorded in 2018. It has a useful life of 10 years.

During 2019, the BroBibs entered into the following transactions:

Part A [22 points]:

Use the sheet below to journalize the given transactions.

Transactions	General Journal
	Date	Account Titles	Dr.	Cr.
1. Barney sought additional investors for BroBibs. He issued 2,000 shares of no par value cumulative preferred stock for $10 per share. If dividends are declared during the year, the cumulative preferred stock pays a $1 dividend.	Jan 1
2. Paid $9,000 to a vendor for supplies previously purchased on credit in December 2018.	Jan 1
3A. Delivered 2,500 BroBibs to customers and recognized $10,000 of income from cash already collected. Note: 500 BroBibs have not been shipped.	Mar 1
3B. Also, recognized $2,500 expense associated with sale.
4. In order to deliver directly to customers, Barney purchases a truck for $18,000. The truck has an estimated salvage value of $3000 and an estimated useful life of 5 years.	May 1
5. Inventory is flying off the shelf. Barney purchases $7500 of additional inventory on account.	June 1
6. Shareholders want more family friendly BroBibs upsetting Barneys creative genius. In an effort to have more control of his company, he purchases 1000 treasury (common) shares for $8 per share from a particularly grumpy shareholder- Ted Mosby.	July 1
7A. Free of the particular shareholder, Barney is overcome with creativity and designs a new BroBib- the LEGENDARY; it is an instant hit. He sells 4,000 LEGENDARY BroBibs in one week. Record the expense associated with the COGS.	Oct 31
7B. Record the sale: Of the $16,000 that he earns, he receives 50% payment in cash and 50% on account.	Oct 31
8. Ted and Barney call a truce- Barney reissues 700 treasury shares to Ted for $15 each. Record the transaction.	Dec 31
9. Declared and paid a cash dividend of $2700. Record the transactions for preferred and common shareholders.	Dec 31

Part B [8 points]:

Use the sheet below to prepare adjusting entries.

Transactions	AJE General Journal
	Date	Account Titles	Dr.	Cr.
a. BroBibs estimates that 6% of credit sales will prove uncollectible.	Dec 31
b. Recorded depreciation on the truck. The company uses straight-line depreciation.	Dec 31
c. Recorded first year of amortization on the trademark BroBibs.	Dec 31
d. Recorded rent expense for the year.	Dec 31