Question

t s Statement Review of AccountingtW Miami company's fiscal year is Jan 1-Dec. 31 Jan 1 Gardens Department Store had the following transactions last during the year 20xX. e The company issued common stocks for $900,000 cash to start the business (# of stocks issued 20,000 par value: 540/sh) issued bonds for $10,000 Par value-$12,000)un) Bought an equipment (copy machine) for $6,000 cash. (aseful life6 salvage value) years, no Mar 12 Apr 11 Nov 1 Bought $ 50,000 merchandise from a supplier on account Sold merchandise for $ 30,000 on account The merchandise sold had a cost of $20,000 Paid S 6,000 cash for insurance. (insurance coverage: Novl this year-Apr 30 next year) (Use insurance expense account for now) Nov 12 Dee. 20 Dec 31 Received payment on account from the customer S 20,000 cash) Paid back $8,000 to the supplier Paid S 1,000 cash for utilities (Utilities coverage: Nov1-Dec3! . 1 Journalize the transactions. 2. Post the journal entries to the ledger 3. Prepare a Trial Balance (Skip) 4. Assume today is Dec. 31 last year (a) Do an adjustment entry for depreciation. (Use the straight line method) (b) Do another adjustment entry, if necessary 5. Prepare a Trial Balance (Skip) 6. (a) Close the accounts on the ledger. (you have to start with journal entries) (b) Calculate the net balance of each account in Assets, Liabilities and Stockholders' equity and write it on each account. 7. Prepare the balance sheet. 8. Prepare the income statement. .Additional questions If you used Prepaid Insurance account instead of Insurance Expense account on Nov I, what kind of adjustment entry do you have to do at the end of the year? 1. Assume the par value of bonds is $8,000 on Jan 1, what kind of journal entries should you make on Jan 1? What change would you see on the BS? 2.

please help me, please

Answer 1

1. Journal entries

Date	Accounts title	Dr	Cr
Jan 1	Cash	9000000
	Additional Paid in capital (20000*$5)		100000
	common stock(20000* $40)		800000
Jan 1	Cash	10000
	Discount on bonds payable	2000
	Bonds payable		12000
Jan 1	Equipment	6000
	Cash		6000
Mar 12	Merchandise Inventory	50000
	Accounts payable		50000
Apr 11	Accounts receivable	30000
	Cost of goods sold	20000
	Sale		30000
	Merchandise Inventory		20000
Nov 1	Prepaid insurance	6000
	Cash		6000
Nov 12	Cash	20000
	Accounts receivable		20000
Dec 20	Accounts payable	8000
	Cash		8000
Dec 31	Utilities expense	1000
	Cash		1000

7. Balance Sheet

Assets

Cash 909000

Accounts receivable 10000

Merchandise inventory 30000

Prepaid insurance 5000

Equipment 6000

less:Accumulated depreciation   1000 5000

Total assets 959000

Liabilities and Equity

Accounts payable    42000

Bonds payable 12000

Common stock 800000

Retained earnings [7000+100000-2000] 105000

Total Liabilities and Equity 959000

8. Income statement

Sales = 30000

less: cost of goods sold = 20000

gross profit = 10000

less: insurance expense = 1000

less: utilities expense = 1000

less: Depreciation expense = 1000

   Net profit = 7000

4.

	Date	Accounts title	Dr	Cr
a)	Dec 31	Depreciation expense [$6000/6]	1000
		Accumulated depreciation		1000
b)	Dec 31	Insurance expense [$6000 / 6months * 1month]	1000
		Prepaid insurance		1000

Additional questions answer

2.

Date	Accounts title	Dr	Cr
1 Jan	Cash	10000
	Premium on bonds payable		2000
	Bonds payable		8000

It will result in change only is Bonds payable and retained earning balance ,

Balance Sheet

Assets

Cash 909000

Accounts receivable 10000

Merchandise inventory 30000

Prepaid insurance 5000

Equipment 6000

less:Accumulated depreciation   1000 5000

Total assets 959000

Liabilities and Equity

Accounts payable 42000

Bonds payable 8000

Common stock 800000

Retained earnings [7000+100000+2000] 109000

Total Liabilities and Equity 959000