Question

Please make journal entries for the following events: 6) On October 23rd, REI purchased and paid cash for office supplies costing $2,350. 7) On October 31st, REI received and paid $425 for the telephone bill for the month of October. 8) On October 31st, REI also received and paid $570 for the utility bill for the month of October. 9) On the advice of a brilliant financial accounting student who was a good friend of Ella’s, REI decided it was better off to purchase a building rather than continue renting. On November 1st, REI got out of the warehouse and office rental agreement at no cost to REI. REI received a cash refund for all amounts prepaid and not used up as of November 1st, 2018. They found a building to purchase at a total cost of $200,000, which contained an office and warehouse space for REI’s inventory. The cost was all for the building (i.e. no land allocation). REI did not have the money to finance this purchase, so they borrowed $200,000 from the bank by signing a 10-year installment note. The bank placed a loan covenant on the note requiring REI to have a debt-toequity ratio no larger than 1.1 at any fiscal year end. The installment note has an annual interest rate of 5.5% and monthly blended payments are due at the end of every month starting November 30. (Hint: Use an amortization table to calculate the monthly blended payments.) The building is expected to last 40 years and REI felt it was appropriate to depreciate the building using the straight-line method. 10) REI felt it should once again build up its current inventory levels, thus On November 3rd, they purchased on account 500 DoorSpy units at $60 each. The increased cost was due to an increase in the cost of materials to manufacture the DoorSpy, and EDL was passing this additional cost onto REI.

Answer 1

.orAlcntis ter the telkw ng cents: 1 REl purchased and precis kurui supplicesting $2350. 11:123 Om pplies Au Tc CashBzrk'C Dercrashpad for Chine Supples) $2,350 Dcc 3L: Prettt Loz Aic le d ues ve BAI'R CE c Supples d'argx oPELA: 2 REI received and pold $425 for the dephone bill 0:1 31 T Bill Tc Chy/Brk A'C Hergashi lu leplere il Dec 31: Profit & Loss Avis To: T eille Bro Tsephore Dll darged to PULGE 3 REI also recever and pald $570 for the utility bil Oct 3: Tekchanell / lp Chillerke BAR Cahak for Lily Bil IL 1 & Tc Ullty 311 /C charged: olc = ཐཱ༢ འཐཱ་ཥ༢ ཇ༢༢ ; $520 illerc Utlry 4 AFIrreed aash refund for all amounts prepaid No, it eshA' los Hill Berg cash retur rood 5 REI purchased a building by taking Loan from Bank Na. Le Cash 4: $200.OCO To Dark Loan VC Bark 5204_CV Ari N:r 1 ildir ve Tc CashBark A/C Derc cash fac for purchase of buidine! $ 200.000 Payment of Interest North Colcanic $917 BAI' Rashpak ler Udy Bir; Carlar: ent-ly Interest - S - 017 . 112 : ili As MHY :fi:sr árat, TEH::11. table to calla. Interestler the month of c. Dr.Bis Matt & Li D 5917 . Tc Increst on Loan Ay's n en . A Cr $917 917 Mergini Derwislan $59x Tec 1 litru Tc Deprcc.lor A/C Bergospracution allowed buldings Dcc 3: Pratt & Laz AC Tc Depreciaort Bar Di III PAL! Deprecacak.labor Value of the ret - $200 CWU YI lepreur- Valeaften $ 200.000 5 per yea & Purch of Stod N: :1 D. Sanom YA Tc CashCrcditor: A/C Hercutor rhoed $20.30