Question

The company’s year end is September 30. Prepare the journal entries required at each date, as well as any necessary adjusting entries required on Sept. 30 at the year end.  

April 1	Investors contributed $350,000 in cash to start the Company.
April 15	The Company purchased a warehouse for $125,000. Depreciation for the six months totaled $1,000.
April 17	The Company purchased sixteen golf bags for $8,000 total ($500 each). The company paid for half of the stock with cash and was billed for the remainder.
May 1	The company paid $6,000 for advertisements that will run monthly May 2019 through May 2020.
July 1	The Company borrowed $200,000 at 4% interest rate from Giant Bank; the principal will be due in five years. The first interest payment will be due July 1, 2020.
Aug. 20	The company sent a $3,500 payment to its supplier for the golf bags it purchased in April.
Aug. 21	A customer prepaid $10,000 for a special order that will be delivered by in January.
Sept. 15	The company declared and paid a dividend of $500.
Sept. 30	The company sold 12 golf bags during the last six months for $1,500 each; however, the company only collected $3,000 in cash; the remaining amount was billed to creditworthy customers and is expected to be paid in February 2020.
Sept. 30	Income taxes totaled $2,000. Assume that taxes will be paid in February 2020.

Answer 1

Journal Entries for the transaction given:
Date	Particulars	Debit	Credit
1st April	Cash	$350,000
	Owners Capital		$350,000
	(To record contribution made for cash )
15th April	Warehouse	$125,000
	Cash		$125,000
	(To record warehouse purchased for cash )
17th April	Inventory	$8,000
	Cash		$4,000
	Accounts payable		$4,000
	(To record purchases made)
	(Assuming Perpectual method is followed)
1st May	Prepaid advertisement	$6,000
	Cash		$6,000
	(To record advertisement paid for cash )
1st July	Cash	$200,000
	Gaint Bank Loan		$200,000
	(To record amount borrowed from bank)
20th Aug	Accounts Payable	$3,500
	Cash		$3,500
	(To record cash paid to supplier)
21st Aug	Cash	$10,000
	Unearned Revenue		$10,000
	(Being cash received for sales to be made
	in January)
15th Sept	Dividend	$500
	Cash		$500
	(To record dividend paid)
30th Sept	Cash	$3,000
	Accounts Receivable	$15,000
	Sales Revenue		$18,000
	Sales revenue = 12*1500 =18000
	(To record Sales made on cash and credit
30th Sept	Income Tax Expense	$2,000
	Income Tax Expense Payable		$2,000
	(To record taxes payable in Febuary 2020)
	Adjusting Entries:
30th Sept	Depreciation	$1,000
	Accumalated Depreciation		$1,000
	(To record depreciation)
30th Sept	Advertisement	$2,500
	Prepaid Advertisement		$2,500
	(To record advertisement for the period)
	$6000 *5Months /12 Months = $2500
	5 months i.e from may - sept
30th Sept	Interest Expense	$2,000
	Interest Expense Payable		$2,000
	(To record Interest expense till september end )
	(Loan amount * Rate of Interest * Months in a year /12
	$200000*4%*3(july- sep)/12