JUNE JOURNAL TRANSACTIONS

June 1 Signed a one-year 18.5%, $180,000 note payable with First Bank.

June 1 Purchased 3,000 GPS units on Credit from Navistar for $35.00 per unit.

June 1 Issued 5,500 shares of common stock for $11 per share (Refer to General ledger for description of

common stock).

June 1 Sold 2,000 DVD players on account to Toyota for $75 per units, Invoice #5555.

June 2 Sold 3,500 GPS units on account to Kia for $52 per unit, Invoice #5556.

June 2 Purchases office supplies from Office Max on credit for $1,200.

June 2 Sold 900 docking stations for $64 per unit and 1950 GPS units for $83 per unit on account to Nissan,

Invoice #5560.

June 3 The Board of Directors declared a cash dividend of $5 per share for shareholders of record on June

5th, payable on June 12th.

June 4 Received payment from Toyota for May 11th sale

June 4 Rented part of the warehouse to a new tenant and received $4,900 for three months rent (June, July,

August).

June 5 Paid $2,100 to Michigan Utility Co. for utilities bill that was recorded in May as an Account Payable,

Check #5278.

June 7 Received and paid expense reports for travel and entertainment totaling $925, Check #5279.

June 8 Paid for office supplies purchased on June 2nd, Check #5280.

June 11 Paid in full for the June 1 purchase from Navistar, Check #5281.

June 11 Received a bill from the law firm of Larry, Moe & Curly for $5,400, payable upon receipt, for bond

consulting fees, Check #5282.

June 12 Paid the dividend that was declared on June 3, Check #5283.

June 13 Took advantage of a special deal to purchase 3,250 DVD players on account from JVC for $48 per unit.

June 13 Purchased 850 GPS units on credit from Magellan for $33 per unit.

June 15 Sold 2,000 DVD players on credit to Fort Motor Co. for $89.00 per unit, Invoice 5557.

June 15 Check # 5284 was issued for payroll: $14,500 for salaried and $4,750 for wages.

June 16 Purchased 1,800 docking stations on credit from Samsung for $42 per unit.

June 17 Issued a credit to Kia for the return of 350 defective units from the June 2nd sale. These units has a

cost basis of $35 per unit.

June 17 Returned the 350 defective units received from Kia to Navistar.

June 18 Received payment in full from Toyota for the June 1st sale.

June 20 While inspecting the June 13th purchase, it was discovered that the GPS units were programmed for

South America instead of North America. AC Speed returned the entire order to Magellan.

June 20 A bankruptcy judge disallowed AC Speed's claim for $5,000 due from General Motors. Management

Decided to write off this accounts receivable.

June 22 Sold 1,650 docking stations on credit to Kia for $64.50 per unit, Invoice #5559.

June 23 Paid $75,000 of the $162,500 owed to JVC from May 25, Check #5285.

June 23 Received payment from Ford Motor Co. for $175,000 of the $300,000 owed from May 5.

June 24 Purchased a $100 international phone card for one of the sales representative's upcoming European

business trip, Check #5286.

June 25 Paid in full for the purchase from JVC on June 13, Check #5287

June 26 Purchased 1,250 docking station from Samsung for $41 per unit paying in cash, Check #5288

June 27 Sold 1,500 docking stations on credit to Honda for $61 per unit, Invoice 5558.

June 27 Hired and paid a consultant $75,000 to devise a marketing plan. AC Speed's management felt this was

necessary to develop brand awareness. Check #5289.

June 28 AC Speed is behind in its mortgage payments to Bank of America. Paid a total of $10,000 ($2,000

principal and $8,000 interest), Check #5290.

June 29 Received payment in full from Honda for the June 27th transaction.

June 29 Paid in full for the purchase from Magellan on May 31st, Check #5291.

June 29 Check #5292 was issued for payroll: $14,500 for salaries and $4,750 for wages.

June 30 Paid the first month's principal payment of $15,000 on the note payable. In addition, paid one

month's interest, Check #5293

June 30 Issued bonds payable at face value for $350,000

*All purchases on account terms of 2/15, n/30

**All credit sales have terms of 2/30, n/45

June Month-end Adjustments:

( A ) AC Speed has earned one month of the prepaid rent received from their tenant at the beginning of

June.

( B ) The Company took a physical count of Office Supplies on June 30 and found the following the value of

inventory on hand to be $2,465. The beginning inventory was $2,000. Write the adjusting journal

entry.

( C ) AC Speed estimates bad debt expense on a monthly basis rather than waiting until year-end. The

company uses the allowance method. Based on recent industry estimates, AC Speed estimates that

the allowance account should be 2.5% of accounts receivable. The ending AR balance is $792,675. At

the end of the month (prior to this journal entry) there is a CREDIT balance of $10,000 in the

Allowance for Doubtful Accounts account. Write the necessary adjusting entry.

( D ) The Company took a physical inventory count on June 30 and found the following inventory on hand

to be $122,221. The ending balance in the Inventory account (before this adjusting entry) was

$133,030. Write the necessary adjusting entry.

( E ) The Balance of $14,000 in the prepaid insurance account at the beginning of June represents 4 months

of coverage. Record the amount of insurance for June.

( F ) Depreciation on the company's fixed assets for the month of June is as follows:

1. The furniture and equipment for the warehouse was purchased a few years ago for $10,000. These

assets have a 5-year life, an expected salvage value of $1,000, and are depreciated using the straightline

method.

2. The furniture and equipment for the office was purchased last year for $8,500. these assets have a 7

year life, an expected salvage value of $1,500, and are depreicated using stright-line method.

AC Speed Corporation

Chart of Accounts - General Ledger

BALANCE SHEET ACCOUNTS

Assets

Current Assets

Acct # Account Name

100 Cash

102 Accounts Receivable

103 Allowance for Doubtful Accounts

104 Merchandise Inventory

105 Office Supplies

106 Prepaid Insurance

Property, Plant and Equipment

140 Land

145 Building

146 Accumulated Depreciation - Building

151 Equipment & Furniture - Warehouse

152 Accumulated Depreciation - Equip & Furn. - Warehouse

153 Equipment & Furniture - Office

154 Accumulated Depreciation - Equip & Furn. - Office

Liabilities

Current Liabilities

201 Accounts Payable

202 Wages Payable

203 Interest Payable

204 Dividends Payable

205 Unearned Rent

Long-Term Liabilities

250 Notes Payable

251 Bonds Payable

252 Mortgage (Warehouse) Payable

Capital (Equity)

300 Common Stock, $1 Par, 100,000 Authorized; 60,000 shares Issued/Outstanding

301 Paid In Capital - Excess of Par

330 Retained Earnings

340 Treasury Stock

INCOME STATEMENT ACCOUNTS

Revenue

500 Sales

510 Sales Discounts

511 Sales Returns & Allowances

Cost of Goods Sold

600 Cost of Goods Sold

Operating Expenses

700 Wage Expense (hourly workers)

701 Salaries Expense (Exempt Staff)

702 Marketing Expense

703 Travel and Entertainment Expense

704 Bad Debt Expense

705 Property Tax Expense

706 Office Maintenance & Repair Expense

707 Legal Expenses

708 Insurance Expense

709 Utilities Expense

710 Office Supplies Expense

711 Telecommunications Expense

712 Depreciation Expense - Equip & Furniture - Warehouse

713 Depreciation Expense - Equip & Furniture - Office

Other Income

800 Rent Income

Other Expenses

900 Interest Expense

Other

1000 Income Summary