Question

1. Assuming in its first year of operations in 2015, that AG sold 50,000 shares of 1.00 par stock to an investor for $400,000. 20,000 units of inventory sold for $170,000, of which $20,000 was on credit. Assuming that AG uses the aging method and that the aging method determined that $10,000 is current and AG determines that 2% is likely uncollectible and $10,000 is noncurrent and estimates that 2% is uncollectible.

AG purchased $30,000 of inventory on credit throughout the year. The inventory purchases were (in order of purchases) 10,000 units at $1.00/unit, 5,000 units at $2.00/unit, and 20,000 units at.50cents/unit. AG uses LIFO perpetual method for accounting for inventory. AG incorporates the Lower of Cost or Market in determining ending inventory. Assume that the market value of the inventory suggested a value of $7,000.

On January 2 of 2015, AG issued bonds with a face of 100,000, stated rate of 10%, term 5 years and received $103,956. Market Rate is 9%. Interest is paid every January 1.

AG purchased with cash $25,000 of supplies. AG received $40,000 in cash for delivery of inventory in January.

AG had miscellaneous depreciation expense of $3,000, and paid cash for rent of $20,000. AG invested $20,000 in bank CDs on December 31, 2015. 10% matures in February of 2016 and the remaining matures in July.

AG purchased equipment of $50,000 on credit. There was $4,000 additional fees paid in cash for the installation and set-up of the machine.   Accrue income tax at a rate of 35%. AG received $500 of dividends in cash from investments and paid $3,000 in dividends to its owner.   At year-end there were $5,000 of supplies remaining in inventory.

Please prepare Journal Entries based on the above information. Prepare origination and closing entries. Appropriate Order and presentation should be demonstrated.