Question

Journalize and post both normal monthly transactions for December 2018 and Adjusting Journal Entries.

Acme, Inc. - Normal journal entries for the month of December, 2018: Dec 1 Issued 65,000 shares of common stock for $14 per share. Dec 1 Paid December rent of $7,500. Dec 1 Issued $200,000 note payable at face amount with an interest rate of 10% due in 5 years. Dec 3 Purchased $350,000 of inventory terms 1/10, net 30. Dec 5 Sold land at cost for cash, $20,000 8 Sold equipment with original cost of $60,000 and accumulated depreciation of $35,000 for $18,000 cash. Dec 9 Purchased equipment for $50,000 cash. Dec 10 Sold inventory on account for $340,000 with a cost of $160,000, terms 2/15, net 30. Dec 11 Paid for merchandise inventory that was purchased on December 3rd. Dec 15 Paid utilities, $1,700. 18 Wrote off uncollectible accounts, $18,000. Dec 19 Received payment for sale on December 10th. Dec 31 Declared and paid cash dividend of $0.40 per share. Dec 31 Paid wages and salaries of $9,200. B. Part One, continued: Adjusting Journal Entries Record the AJE's 1. Accrue interest on note issued on December 1st. 2. Depreciation expense for the month is $1,120 for for the building and $605 for equipment. 3. Accrue sales of $42,000 with a cost of goods sold of $19,000. Prepaid insurance of $483 expired in December. 5. Unearned revenue of $7,500 was earned during December. Record patent amortization of $1,200. Allowance for bad debt account should equal 3% of the accounts receivable balance rounded to the nearest dollar.

Answer 1

	JOURNAL ENTRY
	Date	Account Title	Debit	Credit
	Dec,1	Cash	$910,000		(65000*14)
		Common Stock		$910,000
	Dec,1	Prepaid Rent	$7,500
		Cash		$7,500
	Dec,1	Cash	$200,000
		Notes Payable		$200,000
	Dec,3	Inventory	$350,000
		Accounts Payable		$350,000
	Dec,5	Cash	$20,000
		Land		$20,000
	Dec,8	Cash	$18,000
		Accumulated Depreciation	$35,000
		Loss on Sales of equipment	$7,000		(60000-35000-18000)
		Equipment		$60,000
	Dec,9	Equipment	$50,000
		Cash		$50,000
	Dec,10	Accounts Receivable	$340,000
		Sales		$340,000
		Cost of goods sold	$160,000
		Inventory		$160,000
	Dec,11	Accounts Payable	$350,000
		Purchase discount		$3,500	(1%*350000)
		Cash		$346,500	(350000-3500)
	Dec,15	Utilities expense	$1,700
		Cash		$1,700
	Dec,18	Bsad debt expense	$18,000
		Accounts receivable		$18,000
	Dec,19	Cash	$333,200
		Sales discount	$6,800		(340000*2%)
		Accounts Receivable		$340,000
	Dec,31	Dividend	$26,000
		Cash		$26,000	(0.4*65000)
	Dec,31	Wages and Salaries expense	$9,200
		Cash		$9,200
						ADJUSTING ENTRIES 1 Interest expense Interest payable $1,667 $1,667 (200000* 10%*(1/12) 2 Depreciation expense $1,725 Accumulated Depreciation-Building Accumulated Depreciation Equipment $1,120 $605 $42,000 $42,000 3 Accounts Receivable Sales Cost of goods sold Inventory $19,000 $19,000 $483 4 Insurance expense Prepaid Insurance 5483 $7,500 5 Unearned Revenue Sales $7,500 6 Patent Amortization Patent $1,200 $1,200 7 Bad Debt expense Allowance for bad debt lote: since beginning values of allowance and receivable are not known, this amount cannot be calculate