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Prepare the journal entries for each transaction shown. For transactions such as depreciation, amortization of prepaid expenses, etc, they can be done once at the end of the year instead of monthly (it is up to your preference)
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Prepare the T-accounts for all accounts that are affected by the transactions
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Prepare a chart of accounts, with account numbers and descriptions for all accounts
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Prepare a trial balance as of December 31, 2018. The trial balance should show unadjusted balances, adjusting journal entries, adjusted balances, the closing journal entry, and the post-closing trial balance. The trial balance should be in columnar format, broken out into debit and credit columns for each category.
Beginning Account Balances as of January 1, 2018 are as follows: Cash Accounts Receivable Inventory $65,000 $10,000 $7,000 Accounts Payable Retained Earnings $10,500 $71,500 (1) January 2 Investors contributed $150,000 cash to help in launching EAP in exchange for 50,000 shares of stock (2) January 2 Evan hired two of his friends, Eric and Josh, to work for him and to help get started. He will pay his two employees $4,500 each on the first day of each quarter for the work performed in the prior quarter. The first payment will be made on April 1, 2018 for the work performed from January - March 2018. (3)January 31 Evan rented a building for $5,500 per month on a seven year rental contract. Rent is due on the 1st of every month beginning on February 1 (4) January 31 EAP obtained a $60,000 cash loan from Capital Bank. The note has a 6% annual interest rate and requires monthly interest only payments (0.5% per month) on the first day of every month beginning on March 1, 2018. The loan is due to be paid in full in two years. (5) February 28 EAP purchased shelving, racks, a forklift, and other equipment on account for $19,500. This equipment is expected to be usable for 7 years (6) March 1 Made its first monthly interest payment to Capital Bank for the $60,000 loan it obtained in transaction (4) - Don't forget the rest of the months! (7) March 28 EAP purchased oil filters, air filters, brake pads, etc. totaling $375,000 from various manufacturers on account (8) June 1 Sold 12,000 brake pads to Bob's Brakes on account. These brake pads were sold for $36.50 each, and they cost $22.75 each (9) June 15 Sent a check totaling $35,000 to a vendor as partial payment for the inventory purchased in transaction (7) (10) July 7 Sold 350 alternators to Joe's Garage for $145 each on account. EAP had previously purchased these items for $100 each. EAP also sold 1,750 oil filters to Joe's Garage on account for $6 each. They cost EAP $4. (11) August 1 EAP purchased a general insurance plan that will cover the company for two years from August 1, 2018 through July 30, 2020. The policy cost $35,000 for the two years. EAP paid for the policy in cash. (12) September 8 Collected the full amount outstanding from Bob's Brakes on the sale made in transaction (8) (13) October 3 Paid the remainder of the amount due for the inventory purchased in transaction (7), and paid for the equipment purchased in transaction (5) (14) October 15 Paid a $5,000 dividend to shareholders (15) October 19 EAP signed a contract with an auto parts retailer to provide 5,000 oil filters on the first of every month for 6 months beginning on November 1. EAP collected the total sales price for all six month's worth of oil filters when the contract was signed, for a total of $210,000. The filters cost $5.75 each. (16) October 31 Billed Alan's Auto Repair for $47,000 of parts sold and shipped to Alan's on that day. The cost of these items to EAP was $42,650. (17) November 15 Received $165,250 worth of parts inventory purchased from Cal Parts. An invoice came with the parts dated November 15. The invoice is payable on January 15, 2019. (18) December 15 Received a utility bill for $375, which will be paid the first of the following month (19) December 31 Evan is unsure that he will collect the amount due from Joe's Garage, since Joe's has not paid on its account since its purchase in July. Evan estimates that 50% of the balance due from Joe's Garage is potentially uncollectible. In addition, the 10,000 due from the previous year is also estimated to be uncollectible. (20) December 31 EAP receives an order from Bob's Brakes for another 200 brake pads. EAP will deliver them on January 2nd (21) December 31 Prepare an entry to accrue income taxes that will be payable for the year ended December 31, 2018 for EAP at a standard 34% tax rate Beginning Account Balances as of January 1, 2018 are as follows: Cash Accounts Receivable Inventory $65,000 $10,000 $7,000 Accounts Payable Retained Earnings $10,500 $71,500 (1) January 2 Investors contributed $150,000 cash to help in launching EAP in exchange for 50,000 shares of stock (2) January 2 Evan hired two of his friends, Eric and Josh, to work for him and to help get started. He will pay his two employees $4,500 each on the first day of each quarter for the work performed in the prior quarter. The first payment will be made on April 1, 2018 for the work performed from January - March 2018. (3)January 31 Evan rented a building for $5,500 per month on a seven year rental contract. Rent is due on the 1st of every month beginning on February 1 (4) January 31 EAP obtained a $60,000 cash loan from Capital Bank. The note has a 6% annual interest rate and requires monthly interest only payments (0.5% per month) on the first day of every month beginning on March 1, 2018. The loan is due to be paid in full in two years. (5) February 28 EAP purchased shelving, racks, a forklift, and other equipment on account for $19,500. This equipment is expected to be usable for 7 years (6) March 1 Made its first monthly interest payment to Capital Bank for the $60,000 loan it obtained in transaction (4) - Don't forget the rest of the months! (7) March 28 EAP purchased oil filters, air filters, brake pads, etc. totaling $375,000 from various manufacturers on account (8) June 1 Sold 12,000 brake pads to Bob's Brakes on account. These brake pads were sold for $36.50 each, and they cost $22.75 each (9) June 15 Sent a check totaling $35,000 to a vendor as partial payment for the inventory purchased in transaction (7) (10) July 7 Sold 350 alternators to Joe's Garage for $145 each on account. EAP had previously purchased these items for $100 each. EAP also sold 1,750 oil filters to Joe's Garage on account for $6 each. They cost EAP $4. (11) August 1 EAP purchased a general insurance plan that will cover the company for two years from August 1, 2018 through July 30, 2020. The policy cost $35,000 for the two years. EAP paid for the policy in cash. (12) September 8 Collected the full amount outstanding from Bob's Brakes on the sale made in transaction (8) (13) October 3 Paid the remainder of the amount due for the inventory purchased in transaction (7), and paid for the equipment purchased in transaction (5) (14) October 15 Paid a $5,000 dividend to shareholders (15) October 19 EAP signed a contract with an auto parts retailer to provide 5,000 oil filters on the first of every month for 6 months beginning on November 1. EAP collected the total sales price for all six month's worth of oil filters when the contract was signed, for a total of $210,000. The filters cost $5.75 each. (16) October 31 Billed Alan's Auto Repair for $47,000 of parts sold and shipped to Alan's on that day. The cost of these items to EAP was $42,650. (17) November 15 Received $165,250 worth of parts inventory purchased from Cal Parts. An invoice came with the parts dated November 15. The invoice is payable on January 15, 2019. (18) December 15 Received a utility bill for $375, which will be paid the first of the following month (19) December 31 Evan is unsure that he will collect the amount due from Joe's Garage, since Joe's has not paid on its account since its purchase in July. Evan estimates that 50% of the balance due from Joe's Garage is potentially uncollectible. In addition, the 10,000 due from the previous year is also estimated to be uncollectible. (20) December 31 EAP receives an order from Bob's Brakes for another 200 brake pads. EAP will deliver them on January 2nd (21) December 31 Prepare an entry to accrue income taxes that will be payable for the year ended December 31, 2018 for EAP at a standard 34% tax rate
