Jones Widget Company (JWC) incorporated at the beginning of 2014. Below is the post closing trial balance as of 12/31/14.

Account Title	Balance
Cash	10,700
Accounts Receivable	12,300
Allowance for Doubtful Account	(685)
Inventory	12,300
Prepaid Rent	1,500
Equipment	25,000
Accumulated Depreciation-Equipment	(2,400)
Total assets	58,715
Sales Tax payable	800
FICA Taxes Payable	600
FIT (i.e., Federal Income) Taxes Payable	500
Wages Payable	1,600
Unearned Revenue	6,500
Interest Payable	440
Notes Payable	22,000
Common Stock	23,100
Retained Earning	3,175
Total liabilities + stockholders equity	58,715

Additional Information:

JWC establishes a policy that it will sell inventory at $130 per unit. Sales taxes are 5%. JWC will use the FIFO method and record COGS on a perpetual basis.

Employee wages are $4,000 per month, the federal income taxes (FIT) withheld are $500 and the FICA taxes are $300 per month payable on the first (1^st) and sixteenth (16^th) of the month.

The Beginning inventory of $12,300 consists of 200 units.

The Prepaid Rent balance is for the month of January.

The equipment was purchased on July 1, 2014. It has a residual value of $1,000 and an expected life of five years. It is being depreciated using the straight line method.

Unearned Revenue is for 50 units ordered by two customers in late December. One order will be filled in January, the remainder in early February.

The Notes payable represents a $22,000 bank loan received on November 1 at 12% annual interest.

State unemployment taxes amount to $200 and Federal unemployment taxes amount to $250 per month.

Common stock includes 4,260 shares at $5 par value.

Round all transactions to the nearest dollar.

Below are transactions for January 2015

Jan 1: A $100,000 6% six year bond is issued at 105.074. The market rate at issue of the bond is 5%.

Jan 1: A truck (record as Truck) is purchased for $10,000 cash. It is estimated the truck will be used for 50,000 miles and will have no salvage value. The truck will be depreciated using the units-of-production method.

Jan 2: Machinery (record as Furniture) is purchased for $120,000 cash. The machinery will be used for 8 years, has a salvage value of $8,000, and will be depreciated using the double-declining balance method.

Jan 3: Paid December 31 payroll (wages payable) on Jan 1.

Jan 4: Payroll taxes withheld (FIT payable & FICA payable) during December are remitted to the IRS.

Jan 5: A $500 customer account is written off as uncollectible.

Jan 6: Sales on account of 180 units of inventory occurred during January.

Jan 8: Sales taxes collected in December 2014 are remitted to the local tax collector.

Jan 10: An additional 70 units of inventory were purchased on account for $4,410.

Jan 11: Sold 50 units of merchandise inventory for cash totaling $6,825, which includes 5% sales taxes.

Jan 12: The equipment purchased in 2014 for $25,000 is sold for $24,500. No additional depreciation is recorded for January.

Jan 14: Having sold the equipment, JWC paid off the equipment loan received on November 1 in full. The amount paid was $22,550, which included interest through Jan 14.

Jan 15: A portion of the advance order from December (30 units) is delivered. There is no sales tax on this order.

Jan 16: (a) Paid employee payroll (in cash).

Jan 16: (b) Record the employers payroll tax expense.

Jan 17: Collections from sales on account totaled $5,000.

Jan 18: JWC issued 2,500 shares of $3.60 par value common stock for cash at $8 per share.

Jan 19: JWC issued 300 shares of $12 par-value preferred stock for cash at $102 per share.

Jan 21: JWC Purchased 4,000 shares of its common stock for the treasury at a cost of $16,000.

Jan 25: JWC issued a second bond with a face value of $250,000, a stated rate of 10% (used to calculate interest payments), with a maturity of 4 years. At the time of issuance, the market rate (used to calculate the present values) for bonds of similar characteristics was 12%.

Jan 28: Declared and paid a $0.50 per share cash dividend on 2,400 shares of $5 par value.

Jan 30: Purchased a small company and recorded goodwill for $150,000. (Indefinite life no record of amortization expense)

Below are transactions requiring adjusting entries for January 2015

AJE 1: Record depreciation expense for the truck (Truck) purchased on Jan 1 using the units-of-activity method. During January, the truck is driven 800 miles.

AJE 2: Record the depreciation expense for the machinery (Furniture) purchased on Jan 1.

AJE 3: Record January rent expired.

AJE 4: Accrue January 28 payroll, which will be paid on February 1 and the related payroll tax expense.

AJE 5: Record the accrual of interest expense on the bonds issued on Jan 1.

AJE 6: Record the accrual of interest expense on the bonds issued on Jan 25.

AJE 7: Record the accrual of bad debt expense assuming that $941 is the estimate of uncollectible receivables from the aging schedule.

AJE 8: Record the accrual of income tax expense assuming that the tax rate is 25% of income before taxes.

Special Note:

The chart of accounts for JWC, Inc. includes the following

CASH

ACCOUNTS RECEIVABLE

ALLOWANCE FOR DOUBTFUL ACCOUTNS

INVENTORY

PREPAID RENT

EQUIPMENT

ACCUMMULATED DEPRECIATION_EQUIPMENT

TRUCK

ACCUMMULATED DEPRECIATION_TRUCK

FURNITURE

ACCUMMULATED DEPRECIATION_ FURNITURE

GOODWILL

ACCOUNTS PAYABLE

SALES TAX PAYABLE

WAGES PAYABLE

FICA TAX PAYABLE

FIT TAX PAYABLE

UNEARNED REVENUE

INTEREST PAYABLE

INCOME TAX PAYABLE

STATE UNEMPLOYMENT TAX PAYABLE

FEDERAL UNEMPLOYMENT TAX PAYABLE

NOTES PAYABLE

BONDS PAYABLE

PREMIUM ON BONDS PAYABLE

DISCOUNT ON BONDS PAYABLE

DIVIDENDS

COMMON STOCK

APIC-CS

PREFERRED STOCK

APIC-PS

TREASURY STOCK

RETAINED EARNINGS

SALES REVENUE

COGS

WAGES EXPENSE

RENT EXPENSE

PAYROLL TAX EXPENSE

DEPRECIATION EXPENSE

BAD DEBT EXPENSE

GAIN ON DISPOSAL

INTEREST EXPENSE

INCOME TAX EXPENSE

JWC, Inc. Statement of Retained Earnings For the period January 1 January 31, 2015
RETAINED EARNINGS, BEGINNING OF PERIOD
ADD:
LESS:
RETAINED EARNINGS, END OF PERIOD