Question

BEACON LUMBER, MONTH OF DECEMBER TRANSACTIONS

Dec 1 Beacon purchases a general liability insurance policy for $1,200, paying cash.

The term of the policy is one year, from Dec 1, 20X1 through Nov 30, 20X2.

Dec 1 Beacon purchases a forklift for $10,000, paying half in cash and half with a 5

year, 12% note. The forklift is a well-made American Machine & Foundry

product, and it is expected to last for 10 years.

Dec 1 Beacon purchases office equipment for $2,000, paying cash. The equipment

has an expected life of 5 years.

Dec 3 Beacon purchases 30,000 bd. ft. of lumber from BWLC for $27,000. Again,

after reaching its credit limit it paid cash for the remaining amount.

Dec 3 Beacon sent a check to pay for December's rent ($200) for the office

trailer.

Dec 6 Beacon signs a contract with SCORE Construction to have a warehouse built

on its property. The warehouse will cost $20,000. Beacon will pay SCORE

by issuing $10,000 worth of stock, paying $5,000 in cash and issuing a note

for the balance. Hint…Has A.L.O.E. been impacted?

Dec 6 Beacon pays $300 for three months of advertising on a web site. The ad will

run from Dec 15, 20X1 through March 15, 20X2.

Dec 6 The sister of investor #2 purchases the balance of investor #2’s Beacon stock

for $3,000 (see General Journal, Nov 15). Hint…remember we are thinking about ALOE from the perspective of the corporation.

Dec 7 Beacon pays the lawyer’s bill received on Nov 4.

Dec 15 Mark Peltz, a local sculptor, agrees to rent 1 acre of land at the rear of

Beacon's lot to use as an outdoor studio. He pays $600 for four months’ rent.

The lease will start on Dec 15.

Dec 15 Beacon sells 3 acres of land for $15,000. It receives $5,000 in

cash and a mortgage note for the rest. The note carries interest at 10% and the

principal amount is due in 8 years. Assume that all the land had a uniform cost

per acre when it was purchased by Beacon.

Dec 18 The office manager purchases $250 worth of office supplies.

Beacon pays cash.

Dec 29 Girl Scouts sneak into the lot Friday night and start a campfire. The fire gets

out of control and destroys $1,800 worth of inventory. (To avoid

embarrassment to the Girl Scouts, the company does not file charges with the

police or make an insurance claim. Instead it asks the Girl Scouts to perform

200 hours of community service.) For accounting purposes, this would be considered a loss.

Dec 29 The Board of Directors declares a cash dividend of $.05 per share, payable in

January. (Hint: Use the dividends and dividends payable - common stock

accounts.) Verify that the amount of the dividends (the product of the number

of shares issued and the amount per share) equals $2,000.

Dec 30 This is the last payday for the month of December. The next payday will

occur in January. Payroll checks for the month of December total $5,248.

(For the time being you can ignore taxes. We will examine this topic later in

the course.)

Dec 31 Total sales on account for the month of December were $45,600. Beacon sold

all merchandise at a uniform selling price of $1.60 per board foot. (Hint: you

should be able to use this information to calculate the COGS entry by determining how many unites were sold.)

Dec 31 At the end of the month Beacon had collected cash payments from its account

holders of $37,600.

Please help me by providing journal entries for each transaction. thank you .

Answer 1

Credit Debit 1200 Date Account Title & Explanation 1-Dec Prepaid insurance Cash (To record payment made for Insurance) 1200 10000 1-Dec Forklift Cash 12%Notes Payable (To record purchase of forklift) 5000 5000 2000 1-Dec Office Equipment Cash (To record purchase of Office Equipment) 2000 3-Dec Lumber 27000 Cash 27000 As no credit limit is given I have assumed all amount is paid in cash 200 3-Dec Rent expense Cash (To record rent paid)

6-Dec Warehouse 20000 Common Stock 10000 Notes Payable 10000 (To record common stock issued for construction of building) 300 6-Dec Prepaid advertising Cash (To record amount paid for advertising) 300 6-Dec Cash Common Stock As Nov. 15 Journal is not given it has been assumed that the stock has been purchased for 3000 39 7-Dec Nov.4 amount is required 41 600 42 15-Dec Prepaid Rent Cash (To record rent paid in advance) 600 43 15-Dec Cash 5000 Notes Receivable 10000 Land 15000 (To record sale of Land) (As no amount of Land is given it has been assumed that the valueof land sold will be 15000)

250 51 52 53 18-Dec Office Supplies Cash (To record purchase of Office Supplies) 250 1800 56 29-Dec Loss due to Fire Inventory (To record loss due to fire) 1800 57 58 2000 60 29-Dec Dividends Dividend Payable (To record dividend Payable) 2000 61 62 63 5248 64 30-Dec Payroll Expense Cash (To record payroll) 5248 65 66 45600 67 68 31-Dec Accounts Receivable Sales Revenue (To record sales) 45600 Number of units sold is not given Cost of Goods Sold Inventory (To record cost of inventory sold)

37600 31-Dec Cash Accounts Receivable (To reord cash collected) 37600