Question

The following information is provided for JPT Welding, Inc. at December 31, 2020:

Account Balances	Balance ($)
Accounts Payable	5,700
Accounts Receivable	7,350
Additional Paid-in-Capital	16,680
Cash	45,000
Common Stock ($1 par value)	15,000
Deferred Revenue	3,000
Interest Payable	350
Interest Receivable	450
Investments	10,000
Land	5,000
Long-Term Notes Payable	3,430
Prepaid Expenses	600
Property and Equipment	9,600
Retained Earnings	23,560
Short-Term Notes Payable	1,820
Wages Payable	8,460

JPT entered into the following transactions during January 2020:

1. Sold 1,200 shares of common stock for $10 a share.
2. Purchased supplies for $300 on account.
3. Declared dividends of $1.25 per common share.
4. Signed a contract with a new customer. JPT will charge the customer $25,000 for the project.
5. Purchased new equipment for $2,500 cash and a note payable of $5,500 due 5/31/20.
6. Redeemed a 6-month certificate of deposit for $6,450, including $450 of accrued interest.
7. Received $4,000 from customer for outstanding accounts receivable.
8. Paid $2,700 to a vendor for outstanding account balance.
9. Paid wages owed at December 31, 2019.
10. Received $23,000 from a customer for a project that will be completed in August.

QUESTIONS:

1. Prepare the journal entry for each January transaction.
2. Create T-accounts with beginning balances. Post each journal entry to the appropriate T-account and determine the ending balances. Create new accounts as necessary.
3. Prepare a classified balance sheet at January 31, 2020

Answer 1

JPT Welding, Inc. Journal Enteries Event Particulars 1 Cash a/c To Common Stock (Common Stock issued for cash) Dr. Debit in $ Credit in $ 12000 12000 Debit in $ Credit in $ 76790 3350 2 Dr. 300 Supplies a/c To Accounts Payable (Supplies on account) 300 300 600 4000 5000 17600 1500 Cash Dividend a/c Dr. To Dividend Payable (Dividend declared) 1200 x 1.25 1500 Trial Balance For the period ending 31.12.2020 Particulars Cash Accounts Receivable Interest Receivable Supplies Prepaid Expenses Investments Land Property and Equipment Accounts Payable Interest Payable Deferred Revenue Wages Payable Short-Term Notes Payable Dividend Payable Long-Term Notes Payable Common Stock ($1 par value) Additional Paid-in-Capital Retained Earnings Cash Dividend Totals 3300 350 26000 No Journal Entry 5 8000 Property and Equipment a/c Dr. To Cash To Short-Term Note Payable (Equipment purchased) 2500 5500 7320 1500 3430 27000 16680 23560 6 6450 1500 109140 109140 Cash a/c Dr. To Investments To Interest Receivable (Certificate of deposit redeemed) 6000 450 Retained Earnings For the period ending 31.12.2020 Beginning Balance Less:Cash Dividends 7 Dr. 4000 Cash a/c To Accounts Receivable (Cash from debtors) 4000 23560 -1500 22060 8 Dr. 2700 2700 Accounts Payable a/c To Cash (Creditors paid) 2700 9 Dr. 8460 Wages Payable a/c To Cash (Wages paid) 8460 10 23000 Cash a/c Dr. To Deferred Revenue (Advance from client) 23000

Amounts in $ Amounts in $ Balance sheet As at 30.11.2020 Assets Current Assets Cash Accounts Receivable Supplies Prepaid Expenses 3300 Amounts in $ Amounts in $ Liabilities Current Liabilities 76790 Accounts Payable 3350 Interest Payable 300 Deferred Revenue 600 81040 Short-Term Notes Payable Dividend Payable 350 26000 7320 1500 38470 Non Current Assets Investments Land Property and Equipment 4000 5000 17600 3430 Non Current Liabilities Long-Term Notes Payable 26600 Shareholders Equity Common Stock ($1 par value) Additional Paid-in-Capital Retained Earnings 107640 Total Liabilities & Equity 27000 16680 22060 65740 107640 Total Assets