Chapati Company started business on January 1, 2020. Some of the events that occurred in its first year of operations follow: Transactions 1. An insurance policy was purchased on February 28 for $2,340. The insurance policy was for one year of coverage that began on March 1, 2020. 2. During the year, inventory costing $139,000 was purchased, all on account. 3. Sales to customers totalled $201,000. Of these, $41,000 were cash sales. 4. Payments to suppliers for inventory that had been purchased earlier totalled $112,000. 5. Collections from customers on account during the year totalled $139,000. 6. Customers paid $27,000 in advance payments for goods that will be delivered later. 7. Equipment that cost $180,000 was purchased on October 1 for $40,000 cash plus a two-year, 10% note with a principal amount of $140,000. (Use Notes Payable) 8. Wages totalling $49,000 were paid to employees during the year. 9. The board of directors declared dividends of $12,000 in December 2020, to be paid in January 2021. Adjusting items 10. Recorded the insurance expense for the year. 11. The equipment that was purchased (in item 7) on October 1, 2020, is to be depreciated using the straight-line method, with an estimated useful life of 10 years and an estimated residual value of $20,000. 12. Recorded the interest expense on the note payable for the year. 13. A physical count at year end revealed $25,000 of unsold inventory still on hand. 14. It was determined that 80% of the goods that were paid for in advance (in item 6) had been delivered to the customers by the end of the year. 15. In addition to the wages that were paid during the year, wages of $3,100 remained unpaid at the end of the year. Prepare journal entries for each of the above transactions and adjusting items. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations.)

Chapati Company started business on January 1, 2020. Some of the events that occurred in its first year of operations follow: Transactions 1. An insurance policy was purchased on February 28 for $2,340. The insurance policy was for one year of coverage that began on March 1, 2020. 2. During the year, inventory costing $139,000 was purchased, all on account. 3. Sales to customers totalled $201,000. Of these, $41,000 were cash sales. 4. Payments to suppliers for inventory that had been purchased earlier totalled $112,000. 5. Collections from customers on account during the year totalled $139,000. 6. Customers paid $27,000 in advance payments for goods that will be delivered later. 7. Equipment that cost $180,000 was purchased on October 1 for $40,000 cash plus a two-year, 10% note with a principal amount of $140,000. (Use Notes Payable) 8. Wages totalling $49,000 were paid to employees during the year. 9. The board of directors declared dividends of $12,000 in December 2020, to be paid in January 2021. Adjusting items 10. Recorded the insurance expense for the year. 11. The equipment that was purchased (in item 7) on October 1, 2020, is to be depreciated using the straight-line method, with an estimated useful life of 10 years and an estimated residual value of $20,000. 12. Recorded the interest expense on the note payable for the year. 13. A physical count at year end revealed $25,000 of unsold inventory still on hand. 14. It was determined that 80% of the goods that were paid for in advance (in item 6) had been delivered to the customers by the end of the year. 15. In addition to the wages that were paid during the year, wages of $3,100 remained unpaid at the end of the year. Prepare journal entries for each of the above transactions and adjusting items. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Chapati Company started business on January 1, 2020. Some of the events that occurred in its first year of operations follow:

Transactions
1.	An insurance policy was purchased on February 28 for $2,340. The insurance policy was for one year of coverage that began on March 1, 2020.
2.	During the year, inventory costing $139,000 was purchased, all on account.
3.	Sales to customers totalled $201,000. Of these, $41,000 were cash sales.
4.	Payments to suppliers for inventory that had been purchased earlier totalled $112,000.
5.	Collections from customers on account during the year totalled $139,000.
6.	Customers paid $27,000 in advance payments for goods that will be delivered later.
7.	Equipment that cost $180,000 was purchased on October 1 for $40,000 cash plus a two-year, 10% note with a principal amount of $140,000. (Use Notes Payable)
8.	Wages totalling $49,000 were paid to employees during the year.
9.	The board of directors declared dividends of $12,000 in December 2020, to be paid in January 2021.
Adjusting items
10.	Recorded the insurance expense for the year.
11.	The equipment that was purchased (in item 7) on October 1, 2020, is to be depreciated using the straight-line method, with an estimated useful life of 10 years and an estimated residual value of $20,000.
12.	Recorded the interest expense on the note payable for the year.
13.	A physical count at year end revealed $25,000 of unsold inventory still on hand.
14.	It was determined that 80% of the goods that were paid for in advance (in item 6) had been delivered to the customers by the end of the year.
15.	In addition to the wages that were paid during the year, wages of $3,100 remained unpaid at the end of the year.

Prepare journal entries for each of the above transactions and adjusting items. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations.)

No.	Account Titles and Explanation	Debit	Credit
1.

2.

3.


4.

5.

6.

7.


8.

9.

10.

11.

12.

13.

14.

15.

accounts to possibly use are:

Accounts Payable
Accounts Receivable
Accumulated Depreciation-Buildings
Accumulated Depreciation-Equipment
Accumulated Depreciation-Trucks
Accumulated Depreciation-Vehicles
Advertising Expense
Buildings
Cash
Common Shares
Cost of Goods Sold
Depreciation Expense
Dividends Payable
Equipment
Income Tax Payable
Interest Expense
Interest Payable
Inventory
Land
Miscellaneous Expense
Notes Payable
Operating Expense
Other Expenses
Prepaid Insurance
Prepaid Rent
Rent Expense
Rent Revenue
Retained Earnings
Selling and Administrative Expenses
Supplies Expense
Wages Payable
Wages Expense
Advances to Employees
Bank Loan Payable
Deposits
Dividend Revenue
Dividends Declared
Income Tax Expense
Income Summary
Insurance Expense
Interest Revenue
Interest Receivable
Licence Expense
Long-Term Investments
Mortgage Payable
No Entry
Notes Receivable
Supplies
Prepaid Licence
Prepaid Property Tax
Property Tax Expense
Repair and Maintenance Expense
Sales Revenue
Service Revenue
Short-Term Investments
Telephone Expense
Unearned Revenue
Utilities Expense
Vehicles

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