Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 4, Problem 4.2P
Transaction Analysis; Journal
- January 4: Owners invested $400,000 (the par value of the stock) in exchange for 40,000 shares of common stock.
- January 31: Branton purchased an office building for $320,000 and paid for the purchase with a note payable. Interest in the amount of $16,000 will be due annually on January 31 of each year, beginning in 2019.
- February 1: Branton rented out a portion of its office building to another company. The renter signed a rental lease for the period of February 1, 2018, to January 31, 2019, and paid the annual rent amount of $60,000 upfront in cash.
- March 1: Branton paid $12,000 cash for administrative expenses.
- March 28: Branton purchased supplies in the amount of $42,000 on account with the supplier.
- April 8: Branton purchased a one-year insurance policy that runs from May 1, 2018, to April 30, 2019, in the amount of $62,000 and paid for the policy in full in cash.
- May 1: Branton recorded sales revenue in the amount of $240,000 that was received in cash from customers. Ignore Cost of Goods Sold.
- July 6: Branton paid employees $34,000 in wages in cash.
- September 30: Branton recorded $320,000 in sales revenue. Of this amount, $200,000 was paid in cash and the remainder was on account. Ignore Cost of Goods Sold.
- October 31: Branton received a cash payment from a customer in the amount of $40,000 to be applied to its account balance related to the September 30 sale.
- November 15: Branton purchased supplies in the amount of $26,000 on account with the vendor.
- December 1: Branton recorded sales revenue in the amount of $222,000, all on credit. Ignore Cost of Goods Sold
- December 22: Branton received a legal bill for $14,000, which it will pay when due in February 2019.
Note: Branton records straight-line depreciation on buildings, using a 32-year life and a salvage value of zero. At year-end, wages for 2018 in the amount of $86,000 are due to employees and will be paid in January 2019. Supplies in the amount of $6,000 remain on hand on December 31.
Required
- a. Prepare the journal entries for the transactions. Omit explanations.
- b. Show the
accounting equation effect of each of these transactions. - c. Prepare any necessary year-end adjusting journal entries for these transactions.
- d. Show the accounting equation effect of each of the adjusting journal entries.
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The following items were selected from among the transactions completed by Aston Mar-tin Inc. during the current year:
Apr. 15. Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.
May 1. Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%.
15. Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.)
July 14. Paid Audi Company the amount due on the note of May 15.
Aug. 16. Purchased merchandise on account from Exige Co., $90,000, terms, n/30.
Sept. 15. Issued a 45-day, 6% note for $90,000 to Exige Co., on account.
Oct. 28. Paid Spyder Manufacturing Co. the amount due on the note of May 1.
30. Paid Exige Co. the amount owed on the note of September 15.
Nov. 16. Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing a…
The following transactions apply to Hooper Co. for 2018, its first year of operations:
Issued $60,000 of common stock for cash.
Provided $90,000 of services on account.
Collected $78,000 cash from accounts receivable.
Loaned $20,000 to Mosby Co. on November 30, 2018. The note had a one-year term to maturity and a 6 percent interest rate.
Paid $26,000 of salaries expense for the year.
Paid a $2,000 dividend to the stockholders.
Recorded the accrued interest on December 31, 2018 (see item 4).
Estimated that 1 percent of service revenue will be uncollectible
Prepare the income statement, balance sheet, and statement of cash flows for 2018.
The following items were selected from among the transactions completed by Aston Martin Inc. during the current year:
Apr. 15.
Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.
May 1.
Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%.
15.
Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.)
July 14.
Paid Audi Company the amount due on the note of May 15.
Aug. 16.
Purchased merchandise on account from Exige Co., $90,000, terms, n/30.
Sept. 15.
Issued a 45-day, 6% note for $90,000 to Exige Co., on account.
Oct. 28.
Paid Spyder Manufacturing Co. the amount due on the note of May 1.
30.
Paid Exige Co. the amount owed on the note of September 15.
Nov. 16.
Purchased store equipment from Gallardo Co. for $450,000, paying $50,000…
Chapter 4 Solutions
Intermediate Accounting
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