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Example: The Halverson Co. started business on January 1, 2015. During January, the following transactions were completed: 1 Issued 2,000 shares of common stock at its par 2 Purchased a two-year property insurance policy for 5 Exchanged 4,000 shares of common stock for a 6 Purchased inventory on credit for $20,000 (periodic 10 Borrowed $30,000 from a local bank to be repaid in six 15 Sold merchandise for $23,000. Half the sale was paid 20 Received a payment on an account receivable in the 23 Paid half the bill for the purchases made on January 6. value of $20,000 in exchange for cash. $1,200 cash. building worth $32,000 and land worth $8,000. inventory system). months, plus interest of 6%. in cash, and the other half was on credit. amount of $2,000. 30 Declared cash dividend of $2,000 payable on February 20, 2015 Paid operating expenses of $4,200. 31
Required 1. Prepare general journal entries to record the transactions. 2. Post the journal entries to accounts. 4. Prepare adjusting entries assuming the following information: A. Included in operating expenses are office supplies purchased for $200. A count shows $110 of the supplies are still unused at January 31. B. Accounts receivable of $500 are estimated to be uncollectible. C. The building has a five-year life and will be depreciated using a straight-line method (record one full months depreciation). D. Ending inventory is $15,000. 5. Prepare an adjusted trial balance 6. Prepare closing entries. 7. Prepare a post -closing trial balance 8. Prepare the balance sheet and income statement.
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Answer #1

Halverson Co. Journale Date Account Debit Credit Calculation 20,000.00 Common Stock 20,000.00 2-Jan Prepaid Insurance 1,200.00 Cash 1,200.00 5-Jan Building 32,000.00 8,000.00 Land Common Stock 40,000.00 6-Jan Purchases 20,000.00 Accounts Payable 20,000.00 10-Jan Cash 30,000.00 696 Bank Note Payable 30,000.00 23000/2 -23000/2 15-Jan Cash 11,500.00 Accounts Receivable Sales 11,500.00 23,000.00 20-Jan Cash 2,000.00 Accounts Receivable 2,000.00 23-Jan Accounts Payable 10,000.00 Cash 10,000.00 30-Jan Dividends 2,000.00 Dividends Payable 2,000.00 31-Jan Office Supplies 200.00 Operating Expenses Cash 4,000.00 4,200.00 Adjsting entries 31-Jan Office Supplies Expense 90.00 Office Supplies 90.00 1-Ja Bad debt expense Allowance for doubful debts 500.00 500.00 1-Jan Depreciation expense 533.33 32000/5*1/12 Accumulated Depreciation-Building 533.33 31-Jan Inventory 15,000.00 5,000.00 Ending Inventory 20000-15000 Cost of goods sold 20,000.00 Close purchases -1200/24*1 31-Jan Insurance expense Prepaid Insurance 50.00 50.00 31-Jan Interest expense 105.00 30000*636*21/360 Interest Payable 105.00 osing entr 31-Jan Sales 23,000.00 Retained Earnings 23,000.00 1-Jan Retained Earnings 10,278.33 Cost of goods sold Operating expenses Insurance expense Office Supplies expense Depreciation expense Bad debt expense Interest expense 5,000.00 4,000.00 50.00 90.00 533.33 500.00 105.00 31-Jan Retained Earnings 2,000.00 Dividends 2,000.00Halverson Co T Accounts Date Debit Date CreditDate Debit Date Credit Date Debit Date CreditDate Debit Date Credit Accounts Receivable Allowance for doubtful debts Prepaid Insurance 1-Jan $20,0002-Jan $ 1,20015-Jan $11,500 20-Jan 2,000 10-Jan $30,00023-Jan $10,000 15-Jan $11,50031-Jan $ 4,200 20-Jan 2,000 31-Jan $ 500 2-Jan $ 1,200 31-Jan $ 50 Bal $48,100 $ 9,500 500 Bal $ 1,150 Building Office Supplies 31-Jan 20031-Jan $ 90 Inventory 31-Jan $15,000 5-Jan 8,000 5-Jan $32,000 $15,000 $ 110 Accounts Payable $ 8,000 32,000 Interest Payable Bal Bal Bal Accum. Depr. Building 636 Bank Note Payable 31-Jan 533 23-an $10,000 6-Jan $20,000 31-Jan $ 105 $ 105 1-Jan $20,00031-Jan 5,00031-an 23,000 30-Jan $2,000 31-Jan $2,000 10-Jan $ 30,000 $ 533 Bal 10,000 $30,000 Dividends Payable Common Stock Retained Earnings Dividends 30-Jan 2,000 5-Jan $40,00031- 4,000 31-Jan$50 31-Jan$ 90 31-Jan 533 31-Jan 500 31-Jan 105 31-Jan 2,000 Bal $ 2,000 Bal 60,000 Bal $10,722 Bal Sales Cost of goods sold Purchases Operating expense 31-Jan $23,00015-Jan$23,000 31-Jan 5,000 31-Jan 5,000 6-Jan $20,000 31-Jan $ 20,000 31-Jan 4,000 31-an 4,000 $-Bal. Insurance expense Office Supplies expense Depreciation expense Bad debt expense 31-Jan 5031-Jan $ 50 31-Jan 90 31-Jan 90 31-Jan $ 533 533 31-Jan $ 500 31-Jan $ 500 Bal Bal Bal Interest expense 31-Jan 10531-Jan $ 105 BalHalverson Co Account Cash Accounts Receivable Allowance for doubful debts Prepaid Insurance Invento Office Supplies Land Building Accumulated Depreciation-Building Accounts Payable 696 Bank Note Payable Interest Payable Dividends Payable Common Stock Retained Earnings Dividends Sales Cost of goods sold Purchases Operating expenses Insurance expense Of Unadjusted TB Credit Adjusted TB Credit Post Closing TB Credit Debit Debit Debit 48,100.00 48,100.00 48,100.00 9,500.00 9,500.00 9,500.00 500.00 500.00 1,150.00 15,000.00 110.00 8,000.00 32,000.00 1,150.00 15,000.00 110.00 8,000.00 32,000.00 1,200.00 200.00 8,000.00 32,000.00 533.33 10,000.00 30,000.00 105.00 2,000.00 60,000.00 533.33 10,000.00 30,000.00 105.00 2,000.00 60,000.00 10,721.67 10,000.00 30,000.00 2,000.00 60,000.00 2,000.00 2,000.00 23,000.00 23,000.00 5,000.00 20,000.00 4,000.00 fice Supplies expense Depreciation expense Bad debt expense Interest expense Totals 4,000.00 50.00 90.00 533.33 500.00 105.00 125,000.00 125,000.00 126,138.33126,138.33113,860.00 113,860.00Halverson Co Income Statement Sales Cost of goods sold Gross profit Operating expenses Operating expenses Insurance expense Of 23,000.00 5,000.00 18,000.00 4,000.00 50.00 90.00 533.33 500.00 fice Supplies expense Depreciation expense Bad Debt expense Total Operating expenses Operating profit Interest expense Net profit 5,173.33 12,826.67 105.00 12,721.67 Statement of Retained Earnings Net Profit Less Dividends paid Retained Earnings 12,721.67 2,000.00 10,721.67Halverson Co Balance Sheet Assets Current Assets Cash Accounts Receivable Allowance for doubful debts Accounts Receivable, Net Prepaid Insurance Invento Office Supplies Total Current Assets 48,100.00 9,500.00 500.00 9,000.00 1,150.00 15,000.00 110.00 73,360.00 Fixed Assets Land Building Accumulated Depreciation-Building Building, Net Total Fixed Assets Total Assets 8,000.00 32,000.00 533.33 31,466.67 39,466.67 112,826.67 Liabilities Current Liabilities Accounts Payable 696 Bank Note Payable Interest Payable Dividends Payable Total Current Liabilities 10,000.00 30,000.00 105.00 2,000.00 42,105.00 Stockholders Equity Common Stock Retained earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 60,000.00 10,721.67 70,721.67 112,826.67

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