Required Prepare the necessary journal entries for Drake Company. SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters / through 4.) Sps Kate was a little worried about some of the practices of Fred Abbott, the CEO of Sentimente cided that an association with Sentiments could damage the reputation of her own company. Ka concerned that her business be viewed as socially responsible and any damage to her reputatie early stage could prove very difficult to overcome. She therefore decided to concentrate her producing a quality product that consumers would be proud to purchase and send to their love As expected, November saw a boom in Kate's greeting card business. She invested in add computer graphics equipment, which she partially funded with a bank loan of $15,000 and an addi: investment of her own funds into the business. The loan carries an interest rate of six perce interest payments required semiannually. The entire principal balance is due in one balloon in two years. Kate uses a perpetual inventory system. As of December 2, 2018, Kate's Cards ha following account balances: Sentiments, and de- pany. Kate is very er reputation at this ntrate her efforts on to their loved ones. sted in additional Cash........ Accounts receivable....... Inventory Other current assets. ..... Computer equipment ....... $11,900 16,800 16,000 3,600 38,900 ... $ 1,600 13,800 Accumulated depreciation. Accounts payable........ Other current liabilities ..... Long-term note payable .... Common stock . . . . . ... Retained earnings .......... 900 15,000 25,000 30,900 The company had the following transactions during December 2018: Dec 1 Paid $1,200 rent for the month. 7 Paid $1,800 to employees. Of this amount, $900 was for an amount owed from November. Wages due to employees at the end of each month are recorded as Other Current Liabilities. 9 Received $5,400 from customers as payment on account. 12 Sold, for cash, $11,000 of greeting cards. This merchandise had cost $6,000 to produce. 14 Purchased additional inventory totaling $7,000 on account with terms of 2/10, n/45. 15 Paid cash for supplies (listed as Other Current Assets) in the amount of $600. 19 Sold, on account with terms of 2/10, n/30, greeting cards totaling $6,000. The merchandise had cost $4,000 to produce. 21 Paid additional wages of $1,400. 25 Paid the total owed for the merchandise that was purchased on December 14. 28 Received payment in full from the customer that purchased the merchandise on December 31 Depreciation for the month totaled $900. 31 A physical count of inventory and supplies revealed that $13,000 and $2,000, respectively, were on hand at year-end. Assume that Other Current Assets consists only of the cost o supplies
