Question

Shark Bait, a charter deep sea fishing company, began business on 1/1/2020. 
A summary of its business transactions are as follows.

1. Shark and Bait each invest $92,000 ($184,000 total) and received 11,500 total shares of $4 par common stock.

2. On 2/1/20, the company purchased a large fishing boat for $32,000 of which had a down payment of $4,500 and the rest of borrowed from First Hawaiian Bank. The Note Payable’s principle has a 5% annual interest rate due every 8-months while the principle is due at maturity date in 5 years. The item is depreciated using the straight-line method and has a useful life of 10 years.

3. Shark Bait purchased $7,000 of office supplies and lures from Huge Minnows Company on 3/1/20 on account.

4. Liability insurance was purchased on 3/1/20. The 12 month policy cost $4,000 and was paid in full.

5. Shark Bait provided fishing tours and received $29,000 from customers on 4/10/20. 


6. Shark Bait paid half of what it owes to Huge Minnows Company on 9/1/20.

7. On 9/1/20, Shark Bait received $14,000 cash for a tour that would take place on 2/4/21.

8. On 11/2/20, Shark Bait received $2,300 cash for the sale of some unused lures that were bought on 3/1/20 for $2,800.

9. Operating expenses incurred and paid as of 12/31/20 which consists of:
 Salaries: $7,700 Utilities: $8,200 Boat Gas: $2,800

Complete the following items in EXCEL:

1. Prepare Journal Entries in the General Journal

2. Post the journal entries to the General Ledger

3. Prepare Unadjusted Trial Balance as of 12/31/20.

Answer 1

I	Journal Entries in the Journal Ledger in the Books of Shark Bait company
	Sr no	Date (DD-MM-YYYY)	Particulars	Dr/Cr	Dr amount (In $)	Cr amount (In $)
	1	01-01-2020	Cash/Bank A/c	Dr	1,84,000
			To capital A/C			1,84,000
			(Being capital introduced by Shark and Bait by investing in the total 11500 shares @4 par value)			1,84,000
	2	01-02-2020	Plant and Equipment A/c	Dr	32,000
			To Cash/Bank A/c			4,500
			To Note Payable A/c			27,500
			(Being purchase of ship for the business on loan borrowed from "First Hawaiin Bank")
	3	01-03-2020	Admin Expense A/c	Dr	7,000
			To creditors A/c			7,000
			(being purchase of office supplies and lures from huge Minnow company on account )
	4	01-03-2020	Insurance expense A/c	Dr	4,000
			To Cash/Bank A/c			4,000
			(Being purchase of liability insurance policy by payment made in full)
	5	10-04-2020	Cash/Bank A/c	Dr	29,000
			To Sales A/c			29,000
			Being income from providing fishing tour to the customers)
	6	01-09-2020	Creditors A/c	Dr	3,500
			To Cash/Bank A/c			3,500
			(being half of the amount due to the "Huge minnow company paid off)
	7	01-09-2020	Cash/Bank A/c	Dr	14,000
			To Advance from customers A/c			14,000
			(Being advance received from the customers towards tour to be taken place on 4th Feb 2021)
	8	30-09-2020	Interest expense A/c	Dr	1,467
			To Cash/Bank A/c			1,467
			(Being interest expense recorded for amount borrowed from the First Hawaiin Bank for the purchase of ship)
			[27500 X 8% *8/12]
	9	02-11-2020	Cash/Bank A/c	Dr	2,300
			Loss on sale of Lures		500
			To Admin Expense A/c			2,800
			(Being sale of unused Lures recorded in the books)
	10	31-10-2020	Salaries A/c	Dr	7,700
			Utitlities A/c	Dr	8,200
			Boat gas A/c	Dr	2,800
			To Cash/Bank A/c			18,700
			(Being Operating expenses incurred by the company)
	11	31-10-2020	Depreciation A/c	Dr	2,933
			To Plant & Equipment			2,933
			(Being depreciation expense recorded for the ship purchased by the company on 1st feb 2020)
			[32000/10*11/12]

III	Unadjusted Trial Balance as on 31st December 2020 of shark Bait company
	Particulars	Dr Amount (In $)	Cr Amount (In $)
	Cash/Bank	1,97,133
	Plant & Property	29,067
	Capital		1,84,000
	Notes Payable		27,500
	Creditors		3,500
	Advance from customers		14,000
	Sales		29,000
	Admin Expense	4,200
	Insurance expense	4,000
	Interest Expenses	1,467
	Loss on sale of lures	500
	Salaries	7,700
	Utilities	8,200
	Boat gas	2,800
	Depreciation	2,933
	Grand Total	2,58,000	2,58,000

II	Posting of Journal entries in the general ledger of Shark Baith Company
Cash/Bank Account
Date	Particulars	Amount	Date	Particulars	Amount
01-01-2020	To capital A/C	1,84,000	01-02-2020	Plant and Equipment A/c	4,500
10-04-2020	To Sales A/c	29,000	01-03-2020	Insurance expense A/c	4,000
01-09-2020	To Advance from customers A/c	14,000	10-04-2020	Insurance expense A/c	4,000
02-11-2020	To Admin Expense A/c	2,800	01-09-2020	Creditors A/c	3,500
			30-09-2020	Interest expense A/c	1,467
			02-11-2020	Loss on sale of Lures	500
			31-10-2020	Salaries A/c	7,700
			31-10-2020	Utitlities A/c	8,200
			31-10-2020	Boat gas A/c	2,800
			31-12-2020	Closing balance	1,93,133
		2,29,800			36,667