Question
Using these following transactions, create a set of journal entries and adjusting entries for each transaction. 1/1 An Investor acquired 100% of Crazys stock with
Using these following transactions, create a set of journal entries and adjusting entries for each transaction.
1/1 An Investor acquired 100% of Crazys stock with an investment of $600,000 cash. Par value of stock was 100.00/share and a thousand shares were sold.
Signed a 3 year rent contract and Prepaid 3-years of rent for $72,000
1/15 Purchased office equipment for $36,000 and supplies for $18,000
2/1 Crazy borrowed $250,000 cash by issuing a 3-year note with a stated interest rate of 10% per year. To be compounded annually. The interest will be paid on January 1 of each year (starting next year); and the principal will be paid on maturity
2/7 Received $250,000 cash for consulting, services to be performed in the future for client X
3/1 Started up a second line of consulting services. During the year this operation will be discontinued. Sold services valued at $200,000 for the year. We incurred misc. expenses of $50,000. This summarizes all revenues and expenses for this business. There are no other revenues or expenses for this business. IFCO
7/1 Prepaid $24,000 cash for a 12-month insurance policy (starting on 7/1)
9/12 Purchased $10,000 more of supplies on credit
9/16 Provided consulting services of $100,000 on credit to client Y.
10/1 Purchased $10,000 of an investment in another companys (Pear Inc.) stock. Not considered by our management as a trading stock. Issued 200 additional shares of our common stock for $200,000 cash. Purchased $10,000 of another companys bonds (Peach Inc.). Our intention is not to sell the bond nor hold it until maturity.
10/20 Collected $20,000 from client Y. Sold $50,000 of future services (receiving a cash deposit) to Client ZA. 90% of the services are performed by year-end.
12/1 Decided to sell second line of consulting business. Found a buyer for second line of consulting services. Sold the business in exchange for $40,000 worth of equipment; which resulted in a gain of $40,000.
12/15 Paid down the payable (supplies) with a $10,000 cash payment. Received another $10,000 cash from Client Y
12/31 Counted supplies and determined that $5,000 of supplies were still on hand
12/31 Salaries paid throughout the year: $50,000. Current salaries are to be paid next year on 1/3. The total amount of salaries unpaid at 12/31 is $5,000.
12/31 Determined appropriate total depreciation is $10,000
12/31 Determined that there is still about $10,000 to do for client X
12/31 Determined that the stock purchased on 10/1 was now only worth $8,000 and the bond purchased on 10/1 is worth $12,000. However, neither the stock nor the bond were actually sold.
12/31 We declared and paid a dividend of $10,000
12/31 Determined we paid and incurred $5,000 in restructuring expenses related to discontinued operations
12/31 We received cash of $1,000 in dividends from Pear Inc.
Tax Rate is 20% (none of the tax is paid, but it is accrued as a liability
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