Question

Instructions: 1. Prepare the journal entries for transactions A-T below and record them on the "Journal Entries" tab. 2. Once you have created the journal entries, post them to the "T-Accounts" tab. 3. Prepare journal entries for adjusting journal entries 1-6. 4. Post the adjusting entries to the correct T-Accounts in the "T-Accounts" tab. Transaction No. Transaction Chapter January 1: Pane purchases inventory on account to make stained glass windows. The contract has terms of 2/10, n/30. The goods were purchased under the shipping terms of FOB Shipping Point. Inventory Cost Shipping Cost $95,000 $400 January 1: Pane rents some of their extra warehouse space to a tenant for $500/mo. At the beginning of the month, the tenant pays for 1 year of rent. The tenant first occupied the property on January 1 of the current year. Total Rent Paid $6,000 January 1: Pane purchased a one year insurance policy with coverage beginning on April 1. Insurance Policy $34,000 January 9: Pane pays for the inventory purchased in transaction A. February 1: Pane makes sales of on account. Sales on account Cost of Goods Sold $500,000 $20,000 March 1: Pane purchases additional inventory on account to make stained glass windows. The goods were purchased under the shipping terms of FOB destination. The contract has the terms of 1/10, n/30. Inventory Purchased $12,000 April 1: Pane pays for the inventory purchased in transaction E.

Answer 1

	Date	Account Titles	Debit	Credit
A	Jan-01	Inventory	$          95,400
		Accounts Payable		$           95,000
		Cash		$                 400
		(Purchased inventory on account and incurred shipping cost)
B	Jan-01	Cash	$            6,000
		Deferred Rent Revenue		$             6,000
		(Received rent in advance for 1 year)
C	Jan-01	Prepaid Insurance	$          34,000
		Cash		$           34,000
		(Cash paid for one year insurance policy)
D	Jan-09	Accounts Payable	$          95,000
		Cash		$           93,100
		Inventory		$             1,900
		(Cash paid net of 2% discount)
E	Feb-01	Accounts Receivable	$       500,000
		Sales Revenue		$         500,000
		(sales made on account)
		Cost of Goods Sold	$          20,000
		Inventory		$           20,000
		(Cost of Goods Sold)
F	Mar-01	Inventory	$          12,000
		Accounts Payable		$           12,000
		(Purchased inventory on account)
G	Apr-01	Accounts Payable	$          12,000
		Cash		$           12,000
		(Cash paid)

Since only transactions upto G were given, i have provided journal entries for same
In transaction G, it is written as cash paid for inventory purchased in transaction E, but inventory is purchased in transaction F