Question

A young entrepreneurial jewelry maker has a new start-up, Be Jeweled, Inc. with a calendar year end of December 31, 2017. Complete the Journal Entries for all transactions listed for Be Jeweled, Inc. for the first two quarters ending June 30, 2017. Be sure to include a date for each journal entry. You do not need to provide explanations for the Journal Entries. The first Journal Entry has been done for you. Be sure to include column totals to compare your debit and credit totals as you complete the JE's. (16 points– graded for accuracy and format, including appropriate Excel spreadsheet links and formulas) Transactions: 1/2/17 Issued 7,100 shares of stock to investors consisting of friends and family. Shares were sold at par value of $21 each. Paid $2,400 in cash to purchase display equipment for the jewelry showroom. Puchased a building for office, workshop, and retail space for $348,000. They paid 35% down in cash and 2/1/17 2/1/17 3 signed a 20 year mortgage note with a 4.5% interest rate for the rest. Principal and interest payments will be made annually. 2/1/17 2/1/17 Purchased inventory on account for $66,350. The company purchased a twelve month insurance policy and paid cash in advance of $2,100. Recorded jewelry sales to a local art gallery, sold on account for $8,500. Received a 5 year loan of $260,000, requiring annual payments, from the bank. The annual interest rate 4 6. 2/26/17 4/1/17 was 4.75%. Paid $42,000 of the Account Payable for the inventory to the supplier. The company received a cash payment of $5,505 from the sales on account from the local art gallery. Jewelry sales in cash for February through June 30th were $62,835. Cost of Goods Sold for the February through June 30th sales (cash and credit) were $30,340. Salaries and wages expense for February through June 30th combined was $28,065. Of this total, $24,530 was paid in cash and the rest will be paid in July. The company records depreciation monthly. The building has a useful economic life of 40 years and the 4/2/17 4/30/17 6/30/17 6/30/17 6/30/17 10 11 12 6/30/17 13 company uses the straight line depreciation method. Pay attention to the purchase date! The company records depreciation monthly. The display equipment has a useful economic life of 10 years 6/30/17 14 and the company uses the straight line depreciation method. Insurance expense for Feb through June 30th is 5/12 of the amount paid in advance. 6/30/17 6/30/17 15 16 The company accrued interest expense for the first five months they held the mortgage and the first three months they held the bank loan.

Answer 1

Journal Entries are as under

$ $

1 1/2/17 Cash or Bank A/c.   Dr. 1,49,100

To Shares of Stock A/c. 1,49,100

(Being 7100 Shares of sock issued at par value of

$21 each. Issued to investors, Friends and Family)

2 2/1/17 Display Equipment A/c.   Dr . 2,400

To Cash A/c. 2,400

(Being cash paid to purchase display equipment)

3 2/1/17 Building A/c. Dr. 3,48,000

To Cash A/c. 1,21,800

To Mortgage Note (20 Years) A/c. 2,26,200

   (Being building purchased for office, workshop and

   retail space. 35% cash payment and balance loan on

   20 year mortgage note)

4 2/1/17 Inventories A/c. Dr. 66,350

To Account Payable 66,350

   (Being inventories purchased on account)

5 2/1/17    Insurance A/c. Dr. 875

Pre-paid Insurance A/c.     Dr. 1,225

   To Cash A/c. 2,100

   (Being insurance for 12 months paid)

6 2/26/17 Account Receivable A/c. Dr.    8,500

To Sales A/c.     8,500

   (Being jewelry sold to local art gallery)

7 4/1/17 Cash A/c. Dr. 2,60,000

To Loan from Bank (5 Year) A/c.    2,60,000

   (Being obtained 5 year loan from bank.

   Rate of Interest 4.5% p.a.)

8 4/2/17 Account Payable A/c. Dr. 42,000

To Cash 42,000

(Being part payment made to inventory supplier)

9 4/30/17 Cash A/c. Dr. 5,505

To Account Receivable 5,505

(Being part payment received from local art gallery)

10 6/30/17 Cash A/c. Dr.    62,835

To Sales A/c. 62,835

(Being jewelry sale in cash from Feb. 17 to 30 June

2017)

11 6/30/17 No journal entry to be passed, as this is part of P & L A/c.

12 6/30/17 Salaries & Wages A/c. Dr.    28,065

To Cash A/c. 24,530

To Salaries & Wages Payable A/c. 3,535

(Being salaries & wages paid and provided)

13 6/3017 Depreciation on Building Dr.   3,625

To Building A/c. 3,625

(Being depreciation @725 for 5 months)

14 6/30/17 . Depreciation on Display Equipment A/c. Dr. 100

To Display Equipment A/c. 100

(Being depreciation @100 for 5 months)

15 6/30/17 This is just an information. Relevant Journal Entry

already passed at transaction no.5 date 2/1/17

16 6/30/17 Interest A/c, Dr. 4,241   

To Interest Payable A/c. 4241

(Being interest @4.5% p.a. on Mortgage Note

20 Year A/c. now provided)  

==============================================================================================

Cash Flow Statement for Be Jeweled, Inc for the period ending on June 30, 2017

$ $

Cash Flow from Operating Activities

Cash Receipt from Customers 68,340

Cash paid to Supplier, Employees, Expenses     (68,630)

Net Cash Flow from Operating Activities (290)

Cash Flow from Investing Activities

Addition to Equipment, Fixed Assets, etc.    (1,24,200)

Net Cash Flow from Investing Activities    (1,24,200)

Cash Flow from Financing Activities

Proceeds From Capital Contributed 1,49,100

Proceeds From Loan 2,60,000

Net Cash Flow from Financing Activities    4,09,100

Cash at the end of the period 2,84,610