Moira and Johnny graduate from college in May 2020 and begin developing their new business They begin by offering clinics for basic acting skills such as improv or dramatic reading Upon developing a customer base, theyll hold their acting retreat These retreats will involve four person teams that put together plays, skits, etc to perform at the end of the retreat In the long run, they plan to sell stage makeup costuming and develop an acting studio for blossoming talent On July 1, 2020, Moira and Johnny organize their new company as a corporation, The Crowening Inc The articles of incorporation state that the corporation may sell 200,000 shares of common stock with a par value of $2 Each share of stock represents a unit of ownership Moira and Johnny will act as co presidents of the company The following transactions occur from July 1 through December 31 Jul 1 Sell $10,000 of common stock to Johnny at par Jul 1 Sell $10,000 of common stock to Moira at par Jul 1 Purchase a one year insurance policy for $3,360 ($280 per month) to cover injuries to participants from any bird related accidents Jul 2 Pay legal fees of $1,800 associated with incorporation Jul 4 Issue an additional 5,000 shares of common stock to Moira in exchange for land worth $35,000 Jul 7 Sell 140,000 shares of common stock on the market for $30 each Jul 8 To raise capital to fund the building of the acting studio, The Crowening issues $360,000 of 8 , 5 year bonds They will pay interest quarterly The market rate is 4 Jul 15 After the bond issuance, Johnny and Moira realize they wont need all $360,000 They decide to use the excess ($60,000) to invest They purchase $20,000 of short term trading securities and invest $40,000 in Rays Rags, a costuming company Their investment in Rays represents a 40 ownership stake in the company Jul 22 Moira runs her first acting clinic She received $60,000 for the clinic, which cost her $12,000 to conduct 70 of this $60,000 was received in cash, with the rest being on account, due in 6 months NOTE Use CASH for Cr In COGS entry Jul 24 Repurchase 32,000 shares of stock as treasury stock for $22 share Jul 30 The Crowening receives $83,000 in advance for a clinic to be held on August 17 Aug 1 Declare a cash dividend of $0 32 share The date of record will be August 15 Date of payment will be January 3 Aug 4 The company purchases acting props for $8,000 cash total Aug 10 The company purchases lighting equipment on account for $18,000 Aug 17 Moira conducts her second acting clinic Aug 24 Office supplies are purchased on account for $4,000 Sep 1 To provide better storage of equipment and costumes, the company rents a storage unit, purchasing a one year rental policy for $3,660 ($305 per month) Sep 30 The Crowening pays its first bond interest payment Oct 17 Rays Rags releases earnings for Q3 They report earnings of $1 1Million and declare a $3 share dividend They have 100,000 shares of common stock outstanding Oct 30 Rays Rags pays the cash dividend from October 17 Nov 8 Purchase a company car on installment for $50,000 with an interest rate of 4 Agree to make monthly payments of $921 for the next 60 months, with the first payment due November 30 Nov 30 Make first car payment Dec 1 Johnny sells $1,500 worth of lighting equipment for a profit of $3,000 Assume no impact on depreciation Dec 5 Resell 10,000 shares of treasury stock for $26 share Dec 12 Rays Rags has recently come under fire for insider trading The Crowening sells off their investment for $0 65 share Dec 16 The company declares a 20 stock dividend, distributable 12 31 Market price is $18 share Dec 31 Distribute stock dividend Dec 31 Pay second bond interest payment Dec 31 Pay monthly car payment The following information relates to year end adjusting entries as of December 31, 2020 Depreciation of the lighting equipment and acting props totals $4,200 Six months worth of insurance has expired Four months worth of rent has expired Of the office supplies purchased on August 24, $480 remains Johnny calculates that the company owes $6,000 in income taxes The short term trading securities are currently worth $18,000 REQUIREMENTS Record each of the transactions listed above in the General Journal tab, including the adjusting entries (these are shown as items 1 35) From those transactions, populate the General Ledger and review the Trial Balance tab to see the effect of the transactions on the account balances

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 27, 2024

Moira and Johnny graduate from college in May 2020 and begin developing their new business. They begin by offering clinics for basic acting skills such

Moira and Johnny graduate from college in May 2020 and begin developing their new business. They begin by offering clinics for basic acting skills such as improv or dramatic reading. Upon developing a customer base, theyll hold their acting retreat. These retreats will involve four-person teams that put together plays, skits, etc. to perform at the end of the retreat. In the long run, they plan to sell stage makeup/costuming and develop an acting studio for blossoming talent. On July 1, 2020, Moira and Johnny organize their new company as a corporation, The Crowening Inc. The articles of incorporation state that the corporation may sell 200,000 shares of common stock with a par value of $2. Each share of stock represents a unit of ownership. Moira and Johnny will act as co-presidents of the company. The following transactions occur from July 1 through December 31.

Jul.	1	Sell $10,000 of common stock to Johnny at par.
Jul.	1	Sell $10,000 of common stock to Moira at par.
Jul.	1	Purchase a one-year insurance policy for $3,360 ($280 per month) to cover injuries to participants from any bird-related accidents.
Jul.	2	Pay legal fees of $1,800 associated with incorporation.
Jul.	4	Issue an additional 5,000 shares of common stock to Moira in exchange for land worth $35,000.
Jul.	7	Sell 140,000 shares of common stock on the market for $30/each.
Jul.	8	To raise capital to fund the building of the acting studio, The Crowening issues $360,000 of 8%, 5-year bonds. They will pay interest quarterly. The market rate is 4%
Jul.	15	After the bond issuance, Johnny and Moira realize they wont need all $360,000. They decide to use the excess ($60,000) to invest. They purchase $20,000 of short term trading securities and invest $40,000 in Rays Rags, a costuming company. Their investment in Rays represents a 40% ownership stake in the company.
Jul.	22	Moira runs her first acting clinic. She received $60,000 for the clinic, which cost her $12,000 to conduct. 70% of this $60,000 was received in cash, with the rest being on account, due in 6 months. NOTE: Use CASH for Cr. In COGS entry.
Jul.	24	Repurchase 32,000 shares of stock as treasury stock for $22/share.
Jul.	30	The Crowening receives $83,000 in advance for a clinic to be held on August 17.

Aug.	1	Declare a cash dividend of $0.32/share. The date of record will be August 15. Date of payment will be January 3.
Aug.	4	The company purchases acting props for $8,000 cash total.
Aug.	10	The company purchases lighting equipment on account for $18,000.
Aug.	17	Moira conducts her second acting clinic.
Aug.	24	Office supplies are purchased on account for $4,000.
Sep.	1	To provide better storage of equipment and costumes, the company rents a storage unit, purchasing a one-year rental policy for $3,660 ($305 per month).
Sep.	30	The Crowening pays its first bond interest payment.
Oct.	17	Rays Rags releases earnings for Q3. They report earnings of $1.1Million and declare a $3/share dividend. They have 100,000 shares of common stock outstanding.
Oct.	30	Rays Rags pays the cash dividend from October 17.
Nov.	8	Purchase a company car on installment for $50,000 with an interest rate of 4%. Agree to make monthly payments of $921 for the next 60 months, with the first payment due November 30.
Nov.	30	Make first car payment.
Dec.	1	Johnny sells $1,500 worth of lighting equipment for a profit of $3,000. Assume no impact on depreciation.
Dec.	5	Resell 10,000 shares of treasury stock for $26/share.
Dec.	12	Rays Rags has recently come under fire for insider trading. The Crowening sells off their investment for $0.65/share.

Dec.	16	The company declares a 20% stock dividend, distributable 12/31. Market price is $18/share.
Dec.	31	Distribute stock dividend.
Dec.	31	Pay second bond interest payment
Dec.	31	Pay monthly car payment

The following information relates to year-end adjusting entries as of December 31, 2020.

Depreciation of the lighting equipment and acting props totals $4,200.
Six months worth of insurance has expired.
Four months worth of rent has expired.
Of the office supplies purchased on August 24, $480 remains.
Johnny calculates that the company owes $6,000 in income taxes.
The short term trading securities are currently worth $18,000.

REQUIREMENTS:

Record each of the transactions listed above in the General Journal tab, including the adjusting entries (these are shown as items 1-35). From those transactions, populate the General Ledger and review the Trial Balance tab to see the effect of the transactions on the account balances.