Question

After nearly destroying the city of Springfield USA because of many near nuclear melt downs caused by Homer Simpson, Mr. Burns decided to go into selling cookies. On January 2, 2020, Mr. Burn continued his Good Old Fashion Cookies Empire. The company is still a merchandise company and still uses a perpetual inventory system.

1. Prepare all the journal entries on a document.

Misc Information: Mr. Burns sold off all of his fixed assets from the nuclear power plant. Also, there was an adjustment to the allowance for uncollectible account during your brief respite. Mr. Smithers performed the necessary entries to get the books up to date; this included the reduction of the mortgage payable. However, you will calculate interest expense, bad debt expense, and depreciation expense. These amounts will not be given to you. Good luck and time manage appropriately. ***For any note/mortgage payable, you find interest expense the same way you find interest revenue. ***

Check Figures:

Unadjusted Net Loss: ($9,737)

Adjusted Net Loss: ($360,991)

5. January 5: In order to ease his beginning of the year cash flow crunch, Mr. Burns issued Common Stock (1,500,000 shares at $2.00 per share). The Par Value is $1.00 per share. 6.

6. February 1: In order to keep up with being 104 year old hip evil billionaire, Mr. Burns decided to purchase a new truck. The truck cost $60,000. Mr. Burns put a down payment on the truck of $10,000 and took out a note for the rest (long term). The interest rate of the note is 10%. The truck will depreciated by miles. The expected life of the truck is 100,000 miles.

7. February 20: Mr. Burns sold his delicious cookies to Candy Store on account $300,000.   

Mr. Burns offered terms 2/20, n40. The cost of merchandise sold was $150,000.

8. February 28: Mr. Burns bought cookie dough (inventory) to keep the cookie assembly line going. Mr. Burns paid cash for the cookie dough $400,000

9. March 1st. Mr. Burns reclassed the current portion of long term notes payable. Reclass only the portion on the balance sheet as of January 1st, 2020.

10. March 5: Mr. Burns paid for the following expenses that came in: Sales Salary Expense $70,000, Advertising Expense $50,000, and Delivery Expense $40,000. All of the expenses were paid in one transaction.

11. March 6: Mr. Burns collected $30,000 of the 1/1/2020 balance of the note receivable from Mayor Quimby. The interest rate was 15% and the Note was written on July 1th, 2019

Answer 1

Cash A/c Dr. 30,00,000

To Shares issued A/c 15,00,000

To Share Premium A/c 15,00,000

Truck A/c Dr. 60,000

To cash A/c 10,000

To credit A/c 50,000

Cash A/c Dr. 150,000

Goodwill A/c Dr. 150,000

To business A/c 300,000

Inventory A/c Dr. 400,000

To cash A/c 400,000

Sales Salary Expense A/c Dr. $70,000

Advertising Expense A/c Dr. $50,000

Delivery Expense A/c Dr. $40,000

To Cash A/c 160,000

Cash A/c Dr 30,000

Interest A/c Dr 4,500

To Mayor A/c 34,500