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 4.6P
- January 18: The owners invested $200,000 (the par value of the stock) into the business and acquired 40,000 shares of common stock in return.
- February 1: Tides bought factory equipment in the amount of $45,000. The company took out a long-term note from the bank to finance the purchase.
- February 28: The company paid cash for rent to cover the 12-month period from March 1, 2018, through February 29. 2019, in the amount of $27,000.
- March 1: Tides purchased supplies in the amount of $28,000 on account.
- March 22: Tides recorded sales revenue in the amount of $120,000. Half of this amount was received in cash and half was paid on account. Ignore cost of goods sold.
- May 1: Tides received cash payments to pay off all the customer accounts.
- May 29: The company paid wages of $34,000 in cash.
- July 12: Tides recorded sales revenue in the amount of $180,000, all of which was paid in cash. Ignore cost of goods sold.
- July 31: Tides paid $3,200 cash for interest on the note taken out on February 1.
- August 8: Tides paid off the balance owed to a supplier for the purchase made on March 1.
- September 1: Tides paid $6,000 cash for utilities.
- October 14: Tides paid wages of $24,000 in cash.
$100,000 was received in cash; the remainder of this balance was sold on account Ignore cost of goods sold.
- December 31: Tides declared and paid a $25,000 dividend.
The chart of accounts used by Tides Tea Company is as follows:
Chart of Accounts | ||
Group | Account # | Account Title |
100: Assets | 101 | Cash |
102 | ||
103 | Supplies | |
104 | Prepaid Rent | |
110 | Equipment | |
112 | Accumulated Depreciation—Equipment | |
200: Liabilities | 201 | Accounts Payable |
203 | Wages Payable | |
210 | Interest Payable | |
220 | Notes Payable | |
300: Equity | 301 | Common Stock |
310 | ||
320 | Dividends | |
400: Revenues | 401 | Sales Revenue |
500: Expenses | 501 | Wage Expense |
502 | Utilities Expense | |
503 | Rent Expense | |
504 | Administrative Expense | |
505 | Insurance Expense | |
506 | Supplies Expense | |
510 | Depreciation Expense—Equipment | |
600: Other | 601 | Income Summary |
Required
- a. Journalize the transactions for the year Omit explanations.
- b. Post the journal entries to the general ledger.
- c. Prepare an unadjusted trial balance as of December 31.
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Vigeland Company completed the following transactions during Year 1. Vigeland’s fiscal year ends on December 31.
January 15
Purchased and paid for merchandise. The invoice amount was $15,200; assume a perpetual inventory system.
April 1
Borrowed $774,000 from Summit Bank for general use; signed a 10-month, 9% annual interest-bearing note for the money.
June 14
Received a $24,000 customer deposit for services to be performed in the future.
July 15
Performed $3,450 of the services paid for on June 14.
December 12
Received electric bill for $26,160. Vigeland plans to pay the bill in early January.
December 31
Determined wages of $15,000 were earned but not yet paid on December 31 (disregard payroll taxes).
Required:
Prepare journal entries for each of these transactions.
Prepare the adjusting entries required on December 31.
Statsen Company, which prepares financial reports at the end of the calendar year, established a branch on July 1, 2020. The following transactions occurred during the formation of the branch and its first six months of operations, ending December 31, 2020.
1. The Home Office sent $35,000 cash to the branch to begin operations.
2. The Home Office shipped inventory to the branch. Intercompany billings totaled $75,000, which was the Home Office's cost.
3. The branch acquired merchandise display equipment which cost $15,000 on July 1, 2020. (Assume that branch fixed assets are carried on the home office books).
4. The branch purchased inventory costing $53,750 from outside vendors on account.
5. The branch had credit sales of $106,250 and cash sales of $43,750.
Requirements:
1. Prepare journal entries in the books of the home office and in the books of the branch office for the above transaction
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