Question
Results for 2020 Sales $ 281,300 All sales on credit Inventory Purchases on credit = 191,400 and ending inventory $56200 Depreciation expense $ 16,000 not
Results for 2020 Sales $ 281,300 All sales on credit Inventory Purchases on credit = 191,400 and ending inventory $56200 Depreciation expense $ 16,000 not including assets sold, bought or found Patent purchased in 2018 and determined to have remaining useful life of 12 years in 2020 Wages Expense $ 27,450 Paid in cash $ 2,194 owed at end of 2020 Insurance policy indicates that $5,700 was paid in May 2019 for 24 month coverage starting May 1 2019. During 2020 found an asset purchased and recorded in 2016 that had not been depreciated - cost 4,230 no salvage 10 year useful life Sold AFS Debt Securities that cost 400 for 390 in cash ($7 loss in AOCI recorded previously) Sold equipment that cost 3,000 with accumulated depreciation of 2,690 for $200 in cash. Purchased new equipment costing $6,975 with $2,000 down payment and 10% note payable on December 1, 2020 (first payment due January 1, 2021) 10 year useful life and no salvage Collections on A/R = 275,320Payments on A/P = 176,500 - all accounts payable deal with inventory All service agreements sold to customers in 2019 completed in 2020. New service agreements sold for $2460 in cash during 2020 - 40 percent of the services provided during 2020 Bond terms - interest only for 6.5% paid annually on September 1. Firm agreement with a bank signed on December 15 to refinance bond to a 5 year note in 2021 Note Payable - 4 payments of $3,300 made March 30, June 30, Sept 30 and December 31 interest of 8% per year (2% per quarter) Each note payment pays the interest since the last payment with any remaining amount going toward principle Fair value of remaining AFS Debt Securities $1,400 Other Information Tax rate is 21% (unlike 2019 income taxes have not been paid) Half year convention for depreciation Required: 1. Show journal entries or T accounts for results of 2020 operations.
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