Question

The Feng He Correration, which is a technology company, was formed on January 1 of the current year. Transactions completed during the first year of operation follow. January 1: Issued 700,000 shares of common stock for $9,800,000, which is the par value of the stock. January 10: Acquired equipment in exchange for $1,500,000 cash and a $3,000,000 note payable. The note is due in 10 years. February 10: Paid $31,200 for a business insurance policy covering the two-year period beginning on March 1. February 14: Purchased $950,000 of supplies on account. March 1: Paid wages of $199,000 March 15: Billed $2,590,000 for services rendered on account. April 3: Paid $130,000 of the amount due on the supplies purchased on February 14. April 17: Billed $1,800,000 for services rendered on account. May 1: Paid wages of $160,000. May 7: Collected $230,500 of the outstanding accounts receivable. May 8: Received bill and paid $98,700 for utilities. May 24 Paid $37,000 for sales commissions. June 4 Made the first payment on the note issued on January 10. The payment consisted of $18,000 of interest and $120,000 to be applied against the principal of the note. June 18: Billed customers for $669,000 of services rendered. June 29: Collected $500,000 on accounts receivable. July 10: Purchased $42,000 of supplies in cash. Aug 25 Paid $160,000 for administrative expenses. Sept 23: Paid $34,500 for warehouse repairs. October 1: Paid wages of $60,000 Nov 23: Purchased supplies for $550,000 on account. Dec 19: Collected $155,000 in advance for services to be provided in December and January of the following year Dec 30: Declared and paid a $30,000 dividend to shareholders. Requirement a. Journalize the transactions for the year.

Answer 1

Date Jan. 1 Jan. 10 Feb. 10 Feb. 14 Mar. 1 General Journal Cash Common Stock Equipment Cash Note Payable Prepaid Insurance Cash Supplies Accounts Payable Salaries and Wages Expense Cash Accounts Receivable Service Revenue Accounts Payable Cash Accounts Receivable Service Revenue Salaries and Wages Expense Cash Cash Accounts Receivable Debit Credit $9,800,000 $9,800,000 $4,500,000 [$1500000 + $3000000] $1,500,000 $3,000,000 $31,200 $31,200 $950,000 $950,000 $199,000 $199,000 $2,590,000 $2,590,000 $130,000 $130,000 $1,800,000 $1,800,000 $160,000 $160,000 $230,500 $230,500 Mar. 15 Apr. 3 Apr. 17 May 1 May 7

May 8 $98,700 $98,700 May 24 $37,000 $37,000 Jun. 4 $120,000 $18,000 $138,000 ($120000+ $18000] Jun. 18 $669,000 $669,000 Jun. 29 $500,000 Utilities Expense Cash Sales Commission Expense Cash Note Payable Interest Expense Cash Accounts Receivable Service Revenue Cash Accounts Receivable Supplies Cash Administrative Expense Cash Repairs Expense Cash Salaries and Wages Expense Cash Supplies Accounts Payable $500,000 Jul. 10 $42,000 $42,000 Aug. 25 $160,000 $160,000 Sep. 23 $34,500 $34,500 Oct. 1 $60,000 $60,000 Nov. 23 $550,000 $550,000

Dec. 19 $155,000 $155,000 Cash Unearned Service Revenue Dividends (or) Retained Earnings Cash Dec. 30 $30,000 $30,000