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LeBron James incorporates a new business, Phi Slamma Jamma, Inc., on December 1, 20xx. The company uses the accrual method of accounting. In addition to

LeBron James incorporates a new business, Phi Slamma Jamma, Inc., on December 1, 20xx. The company uses the accrual method of accounting. In addition to the accounts you see below, the company uses Consulting Revenues #400, Sales #401, Gains #405 and the Salaries Expense #500 accounts. Journalize each transaction. P2. Prepare an adjusted trial balance as of December 31, 20XX. You will need to set up ledgers (or t-accounts) for each account used.

Cash

#100

Unearned Revenue

#200

Accts Receivable

#105

Accounts Payable

#201

Allow 4Bad Debts

#106

Salaries Payable

#202

Supplies

#111

Interest Payable

#203

Prepaid Rent

#112

Notes Payable

#210

Equipment

#150

Common Stock

#300

Accum. Deprec.

#151

PIC, XOP Common

#301

Retained Earnings

#320

Dec 1

LeBron invests $1,000,000 cash into Phi Slamma Jamma, Inc. for 100,000 shares of common stock that has a $1 par value and the right to vote. LeBron elects himself to the board of directors and hires Kyrie Irving to be his CEO.

Dec 1

PSJ, Inc. pays $96,000 to rent an office in downtown Cleveland for 12 months.

Dec 1

Acquired $50,000 of office computers by making a $20,000 cash down payment and will pay the balance in nine months.

Dec 1

Purchases inventory from Akron Supply Co. for $200,000 on account. The shipping terms were FOB Destination point. The credit terms are 1/15, N/30.

Dec 1

PSJ, Inc. signs a contract to provide consulting services to clients ratably over the next eight months. PSJ, Inc. collects $160,000 cash from the clients.

Dec 10

PSJ, Inc. sells $300,000 of merchandise to clients on account using the credit terms 2/30, N/90. The cost of the goods sold was $100,000.

Dec 15

Issued check #1 to Kyrie Irving for $50,000 and promised to pay him $30,000 in three months. Withhold $9,600 from Mr. Irvings earning for federal income taxes and .062 and .0145 for Social Security and Medicare taxes.

Dec 20

Issued check #2 to Akron Supply Co. for $175,000.

Dec 31

The board of directors declared a $.05 per share dividend to be paid on Jan 15, 2017.

Dec 31

PSJ, Inc. repurchased 10,000 shares of LeBrons stock for $20 per share.

Dec 31

The computers should last three years and have a salvage value of $0. PSJ, Inc. uses the straight-line method. Some of the prepaid rent has expired. Some of the service revenue work has been completed. Two percent of the inventory sold is expected to be returned. Four percent of the accounts receivable are estimated to be uncollectible.

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