Transaction Analysis Exercise Make Journal Entries 1. Transactions. Presented below are descriptions of several events, conditions, and transactions of ACE Industries. Follow the instructions and complete the Accounting Processing Cycle. On January 1, 2019, ACE raised capital (cash) by issuing 4,000 shares of stock for $100,000. On January 1, 2019, ACE issued long-term bonds for $65,000 cash. Interest is 10% payable on January 1, 2020 On January 1, 2019, ACE acquired a building to use as a retail store site for $40,000 cash. On January 1, 2019 ACE purchased a two year insurance policy in the amount of $12,000. ACE recorded Prepaid Insurance for $12,000. During 2019, ACE purchased inventory worth $18,000 on account (credit). During 2019, ACE sold merchandise on account (credit) in the amount of $40,000. The cost Rev (OGS of the merchandise was $5,000. Hint: there are two events here. nie - Inven A customer was injured using the product sold by ACE and sued ACE on July 3. Although the suit has not been decided, ACE is clearly at fault, and expects to have to pay the full probable amount $3,000, of the judgment early next year. The conservatism principle requires this be recognized in the financial statements. Contingent Liability ACE decided to set aside $20,000 cash in an investment account each year to retire the bond issue when it became due. The first deposit was made on December 31. A flood destroyed a warehouse full of ACE's merchandise (cost of $4,000) in Nebraska. ACE does not own the warehouse. Note: This incident is not considered unusual in nature but is infrequent in occurrence. During 2019, ACE paid dividends in the amount of $4,000 to stock holders. Obligations to employees for wages in the amount of $1,800 had not been paid by year-end. As of December 31, 2019, interest on the bonds has accrued and is due on January 1, 2020. As of December 31, 2019, one year of the insurance has been used up. be 1