Question
Please Help Elijah Rushing was a very inquisitive child growing up. He was a great student in school and always asked a lot of questions.
Please Help
Elijah Rushing was a very inquisitive child growing up. He was a great student in school and always asked a lot of questions. While growing up she was a typical American guy and enjoyed soccer and golf. But once Elijah was given a computer for his 12th birthday he fascinated with electronics. He like everyone else enjoyed playing on the computer but his curiosity went a little further. He opened up his computer to see how it actually worked. He opened up his laptop, computer and cellphone to see how the electronics worked on the inside. His parents were frustrated at first, but when they saw his interest was in how they worked and not just being mischievous, they encouraged him in electronics. Elijah enrolled in a computer class in high school and became certified in Microsoft Office. During his summers while he was in high school, He worked for a local computer store in the small town they lived near. While he was just the receptionist and provided customer service, when it was slow the owner would teach him about how a computer worked. When it came time to apply for college, He knew what he wanted to major in computer science at the University of Maryland. His long term desire was to own his own computer consulting business and help clients set up their computer networks and all their computer needs. After earning undergraduate degree, Elijah got a job a local bank as an IT troubleshooter. He learn a lot but still wanted to own his own business. So after five years at the local bank, He began his own computer consulting business. While doing computer consulting for the past five years has been successful, many of the company's clients wanted to purchase the computer equipment from the business as well. So recently BBSI has begun offering computer equipment as well as consulting services. So now the company offers computer consulting and computer equipment to small businesses. (Hint-remember you will record these two revenues differently because one is a service and one is merchandise!) After several years of running a successful small business BBSI has the following balance sheet shown below. Elijah did not get an MBA so he does not know how to do that much accounting. He has found out that you recently graduated from the Regent University School of Business and Leadership with your MBA. He believes that you have enough experience to help him with his accounting for a few months.
The Best Business Solutions Incorporated had the following balance sheet as of December 31, 2023. The transactions for the first month of 2024 are also presented along with other information about specific accounts. Best Business Solutions Incorporated Balance Sheet December 31, 2023 ASSETS LIABILITIES Cash $139,500 Accounts Payable $ 40,000 Marketable Securities 20,000 Wages Payable 10,800 Accounts Receivable 103,000 Taxes Payable 7,200 All. Uncoll. Accounts -4,000 Short-Term Note Payable 80,000 Inventory 134,000 Interest Payable 10,000 Supplies 5,000 Unearned Revenue 30,000 Prepaid Insurance 9,000 Unearned Consulting Rev. 20,000 Total Current Assets $406,500 Total Current Liabilities $ 198,000 Land $111,500 Long-Term Notes Payable $ 50,000 Equipment 217,000 Bonds Payable 100,000 Accum. Depreciation-Eq -97,000 Mortgage Payable 350,000 Building 590,000 Total Long-Term Liabilities $500,000 Accum. Depreciation-Bl. -110,000 Total Liabilities 698,000 Intangible Assets 60,000 STOCKHOLDER EQUITY Total Long-Term Assets $771,500 Common Stock $200,000 Paid in Capital-CS 50,000 Retained Earnings 230,000 Total Stockholders Equity $480,000 Total Assets 1,178,000 Total Liabilities & Equity 1,178,000 Additional Information Accounts Receivable The following table indicates the historical breakout of accounts receivable Days Current 30 to 60 60 to 90 Over 90 Percent of Balance 50% 30% 15% 5% Percent Collectible 95% 90% 80% 60% The company uses the gross method of recording all sales on accounts.
Marketable Securities The interest rate earned on marketable securities is 8.0%. Inventory In 202x, the company had used the gross method to record inventory purchases on account. Prepaid Insurance A three-year insurance policy in the amount of $10,800 was purchased on July 1, 2022. Equipment Equipment is depreciated at an average amount of $4,000 per month. Building The current building was purchased on January 1, ten years ago and has an expected 40- year life at which time its salvage value will be $40,000. Intangible Assets Intangible assets were initially valued at $60,000 and are being depreciated over 30 years at $2,000 per year. Short-Term Notes Payable The one-year short-term note payable is due on March 1, 2023. The interest rate is 15.0% which is payable at maturity. Long-Term Notes Payable The long-term notes payable are due in ten years. The interest rate on the notes is 6.0%. Bonds Payable The bonds payable mature in twenty years. The interest rate on the bonds is 10.0%. Mortgage Payable The following amortization schedule can be used for the January, 2023 mortgage payment on the 8.0%, 30- year mortgage. Month Payment Interest Principal Balance January $3,000 $2,563 $437 $350,000 $349,563 February $3,000 $2,553 $447 $349,116 March $3,000 $2,543 $457 $348,659 Capital Stock The capital stock is common stock at $10 par value with 50,000 shares authorized, and 20,000 shares issued and outstanding.
Journal Entries (1) Jan 1 Elijah invested $50,000 cash into the business by purchasing 5,000 shares of common stock at $10.00 par value. (2) Jan 2 The Company borrowed $50,000 on a short-term 30 day, 15.0% note payable. (3) Jan 3 The Company paid $42,000 in advance for the 12 month rental of a warehouse. (4) Jan 4 The Company's Board of Directors declared a dividend of $.75 cents per share payable on February 10, 2024 to all shareholders of record on January 20, 2024. (5) Jan 5 The amount in wages payable and taxes payable was paid in full. (6) Jan 6 The Company paid a total of $25,000 on accounts payable less the 2% in purchase discounts for early payment. (7) Jan 7 Cash sales for the week equaled $42,000. The cost of inventory sold equaled $18,000. Please use Sales Revenue. Consulting services revenue during the first week was $22,000 cash. Please use Consulting Service Revenue for consulting services. (8) Jan 8 The company purchased a new van to help with carrying equipment and delivery for $40,000 on a 5 year loan. They put down $5,000 cash. (9) Jan 9 Supplies in the amount of $8,000 were purchased for cash. (10) Jan 10 A customer who owed $40,000 on an account receivable, agreed to sign a 60- day note receivable with an interest rate of 15.0%. The interest earned on the note will be paid at the maturity date of the note receivable. (11) Jan 11 The balance of $15,000 in accounts payable was paid after the discount period. (12) Jan 12 The Company purchased $180,000 of inventory on account with the terms 2/15, net 30. The Company paid freight charges of $5,500 on the inventory purchase. (13) Jan 13 A customer sent an advance payment of $20,000 for the use of special equipment in February and March. (14) Jan 14 Sales on account for the week totaled $76,000 with the terms 2/10, net 30. The cost of inventory sold equaled $32,000. Consulting services on account for the week were $43,500. (15) ) Jan 15 A warehouse building was acquired for $550,000. Closing costs on the acquisition equaled $19,500, and there were costs of $28,900 to get the building into an
operational condition to be used by the company. The company paid $50,000 in cash as a down payment with the balance due being added to the mortgage payable account. (16) Jan 16 The unearned revenue represented the rental of special equipment that was used by another company on weekends and $10,000 of the revenue was earned in January. (17) Jan 17 Collected $80,000 from an accounts receivable, and there was a sales discount for the payment of receivables within the ten day discount period. (18) Jan 18 Salary expenses in the amount of $15,000 and tax expenses in the amount of $8,000 were paid. (19) Jan 19 The Company paid for repairs on equipment $5,500, a property tax bill of $7,500 and $4,000 for advertising. (20) Jan 20 A customer complained that some of the goods they received were damaged. So BBSI gave them an allowance of $4,000 to keep the customer satisfied. (21) Jan 21 Cash sales for the week equaled $54,000. The cost of inventory sold equaled $22,500. Consulting services for cash for the week was $28,000. (22) Jan 22 The company wrote off a customer's account because that company went bankrupt. The account receivable was for $9,500. (23) Jan 23 In order to make a sale the company paid $2,200 to have goods shipped to a customer. (24) Jan 24 The Company made a new issue of 10,000 shares of $10.00 par value common stock for cash. The market price of the stock was $30 per share. (25) Jan 25 A customer returned $5,000 of merchandise in good condition. The cost of the merchandise as $2,400. (26) Jan 26 The Company bought back 2,000 shares of its own common stock for $20 per share and reports the purchase as treasury stock. The Company reissued 1000 shares of its own treasury stock for $35 per share. (27) Jan 27 The purchase of inventory on account on Jan 12 which was reported at the gross amount and $50,000 was paid less the discount. (28) Jan 28 Sales on account for the week totals $54,000. The cost of inventory sold equaled $22,500. Consulting services on account for the week was $28,000.
(29) Jan 29 The company returned $3,000 of inventory that we purchased earlier in the month. (30) Jan 30 Equipment with a historical cost of $40,000 and an accumulated depreciation of $20,000 was sold for $21,000 cash. (Hint-first update the depreciation for the 3 months-January through March which was $500) Also, Equipment with a historical cost of $38,000 and an accumulated depreciation of $35,000 was disposed of with an additional disposal cost of $2,500. (Hint-first update the depreciation for the 3 months-January through March which was $500.) (31) Jan 31 The monthly payment for January of the mortgage payable was made-(see table.) Also, the company paid the 30 day note from January 2nd in full plus interest. Record these adjusting entries for the quarter so Financial Statements are correct! A1-Jan 31 The equipment depreciation entry for the first month of 202x was for $1,000. The depreciation entry for the building for the month of January is $1,150. A2 Jan 31 The amortization of intangible assets for the first month of 202x was completed. A3 Jan 31 A physical inventory of supplies indicated a total amount of $4,000 of supplies still on hand. A journal entry was completed for the supplies used during the first month. A4 Jan 31 Salary expenses incurred during the month of January but not yet paid equaled $17,500. Tax expenses incurred during the month of January but not yet paid equaled $9,900. A5 Jan 31 The amount of rent expense for the warehouse for the first month of 202x was recognized. A6 Jan 31 The amount of insurance expense for the first month of 202x was recognized. A7 Jan 31 The amount of bad debt expense is 5% of the credit sales
Required 1. Complete journal entries for each of the transactions. The numbers in the journal entries can be rounded to the nearest dollar (no cents please). Please record the journal entries using the numbers NOT the dates! 2. Develop a trial balance for Best Business Solutions Incorporated as of January 31, 2023. 3. Develop a single income statement for January in good form for Best Business Solutions Incorporated for the first month of 2023. Federal Income Tax Rate is 21%. 3. Develop a single statement of retained earnings in good form as of January 31, 2023 for Best Business Solutions Incorporated. 4. Develop a balance sheet in good form as of January 31, 2023 for Best Business Solutions Incorporated. 5. Provide four (4) ratios and analysis after you complete the financial statements to Best Business Solutions Incorporated. Do not forget to include the ratios in your analysis to support your comment, recommendation or analysis!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started