Question

Service Revenue per hour = $40

Sales Revenue per unit = $10

Purchase Price per unit = $2

Part 2 - General Journal - Record the following journal entries in the General Journal. • Bison Corporation uses a perpetual inventory system and values inventory with the FIFO method. • Bison Corporation offers a sales discount of 2/10, net 30 to all customers who purchase on account. Trans. Date May 1 Description Sell 60,000 shares of $1 par common stock for $60,000 to obtain the funds necessary to start your business. Borrow $25,000 from the local bank and sign a note promising to repay the full amount of the debt in 5 years. The interest rate is 10%. May 1 May 1 Issue 1,500 shares of $2 par value preferred stock at $25/share. May 1 Purchase equipment necessary for business operations for $15,000. May 1 Pay one year of rent in advance, $12,000 ($1,000 per month.) May 3 Purchase supplies on account, $800. May 3 Purchase 200 units of inventory with cash. May 6 Provide 40 hours of services to customers for cash (calculate using your hourly service rate). May 10 Sell 90 units of inventory to a customer on account. May 12 Sell 50 units of inventory to a customer on account. May 15 Purchase an additional 300 units of inventory on account. 12 May 20 The customer who purchased product on May 12th pays the full amount due.

Answer 1

Bison Corporation Journal entries Date Account 1-May Cash Common Stock Credit Calculation Debit $ 60,000 $ 60,000 $ 25,000 1-May Cash Notes Payable $ 25,000 $ 37,500 1-May Cash Preferred Stock Paid in capital in excess of par-Preferred Stock =1,500*25 =1,500*2 $ $ 3,000 34,500 $ 15,000 1-May Equipment Cash $ 15,000 $ 12,000 1-May Prepaid Rent Cash $ 12,000 $ 800 3-May Supplies Accounts Payable $ 800 $ 400 =200*$2 3-May Inventory Cash $ 400 $ 1,600 -40 hours $40 6-May Cash Service Revenue $ 1,600 $ 900 =90*$10 10-May Accounts Receivable Sales Revenue $ 900 $ 180 =90*$2 10-May Cost of goods sold Inventory $ 180 $ 500 =50*$10 12-May Accounts Receivable Sales Revenue $ 500 $ 100 =50*$2 12-May Cost of goods sold Inventory $ 100 $ 600 =300*$2 15-May Inventory Accounts Payable $ 600 20-May Cash Sales Discounts Accounts Receivable $ $ 490 10 =500*2% $ 500 $ 800 =20 hours*$40 23-May Cash Unearned Service Revenue $ 800 $ 2,000 =200*$10 31-May Notes Receivable Sales Revenue $ 2,000 $ 400 =200*$2 31-May Cost of goods sold Inventory $ 400 $ 1,500 31-May Salaries expense Cash $ 1,500 31-May Dividends $ 700 Cash $ 700

Adjusting entries 31-May Rent expense Prepaid Rent $ 1,000 =12,000/12 $ 1,000 $ 550 =800-250 31-May Supplies expense Supplies $ 550 $ 125 =15,000/10*1/12 31-May Depreciation expense Accumulated Depreciation Equipment $ 125 $ 480 =12 hours $40 31-May Unearned Service Revenue Service Revenue $ 480 $ 300 31-May Utilities expense Accounts Payable $ 300 $ 208 =25,000*10%*1/12 31-May Interest expense Interest Payable $ 208

Credit Bison Corporation T Accounts Date Debit Date Credit Cash 1-May $ 60,000 1-May $ 15,000 1-May $ 25,000 1-May $ 12,000 1-May $37,500 3-May $ 400 6-May $ 1,600 31-May $ 1,500 20-May $ 490 31-May $ 700 23-May $ 800 Date Debit Date Credit Accounts Receivable 10 May $ 900 12-May $ 500 23-May $ 500 Date Debit Date Notes Receivable 31-May $ 2,000 Date Debit Date Credit Inventory 3-May $ 400 10-May $ 180 15-May $ 600 12-May $ 100 31-May $ 400 Unadi Bal. $ 95,790 Unadi Bal. $ 900 Unadi Bal $ 2,000 Unadi Bal. S 320 Ad) Bal. $ 95,790 Supplies 3-May $ 800 Adj Bal. $ 900 Prepaid Rent 1-May $ 12,000 Adj Bal. $ 2,000 Equipment 1-May $ 15,000 Adj Bal. $ 320 Accum. Depr. - Equipment Unadj Bal $ 800 Unadj Bal. $ 12,000 Unadj Bal $15,000 Unadj Bal $ 31-May $ - 125 31-May $ 31-May $1,000 550 Adj Bal. Adi Bal. $ 250 Accounts Payable 3-May $ 15-May $ $ 11,000 Interest Payable Op bal Adj Bal. $ 15,000 Uneared Service Revenue 23-May $ Adi Bal. $ 125 Notes Payable 1-May $ 25,000 800 800 600 Unadi Bal. $ 800 Unadi Bal. $ 25,000 Unadj Bal $ 1,400 31-May $ 300 Unadj Bal. $ 31-May $ - 208 | 31-May $ 480 Adj Bal. $ 25,000 Adj Bal. $ 1,700 Common Stock | 1-May $ 60,000 Adj Bal. $ 208 Preferred Stock 1-May $ 3,000 Adj Bal. $ 320 Paid in capital in excess of par-Pref St 1-May $ 34,500 $ 60,000 $ 3,000 $ 34,500 Bal. Retained Earnings Bal. Dividends 700 Bal. Income Summary 31-May $ Unadj Bal. $ - Unadj Bal. $ 700 Unadj Bal. $ - Adj Bal. $ 700 Adi Bal. $ . 31-May $ 1,107 Adj Bal. $ . 31-May $ 5,480 31-May $ 700 31-May $ 700 31-May $ 4,373 31-May $ 1,107 Bal. $ 407 Bal. Sales Discounts 20-May $ 10 Service Revenue 6-May $ 1,600 Sales Revenue 10-May $ 900 12-May $ 500 31 May $ 2,000 Cost of goods sold 10-May $ 180 12-May $ 100 31-May $ 400 Unadj Bal $ 3,400 Unadj Bal. $ 10 Unadj Bal. $ 680 Unadj Bal. $ 1,600 31-May $ 480 Adj Bal. $ 3,400 Adi Bal. $ 10 Adj Bal. $ 2,080 Adj Bal. $ 680 31-May $ 3,400 31-May $ 10 31-May $ 2,080 31. May $ 680 $ . Bal. $ $ - Bal. Bal. Salaries expense 31-May $ 1,500 . Rent expense Bal. Utilities expense Supplies expense Unadi Bal $ 1,500 Unadj Bal. $ . 31-May $ 1,000 Unadj Bal $ 31-May $ . 300 Unadi Bal. S 31-May $ . 550 Adj Bal. $ 1,500 Adj Bal. $1,000 Adj Bal. $ 300 Adj Bal. $ 550 31 May $ 1,500 31-May $1,000 31 May $ 300 31-May $ 550 Bal. Bal. Bal. $ . Bal. S . $ . Depreciation expense $ . Interest expense Unadj Bal S 31-May $ . 125 Unadi Bal S 31-May $ - 208 Adj Bal. $ 125 Adj Bal. $ 208 31-May $ 125 31-May $ 208 Bal. $ . Bal. $ .

Unadjusted TB Debit Credit 95,790 900 2,000 320 800 12,000 15,000 Adjusted TB Debit Credit 95,790 900 2,000 320 250 11,000 15,000 Bison Corporation Account Names Cash Accounts Receivable Notes Receivable Inventory Supplies Prepaid Rent Equipment Accumulated Depreciation Equipment Accounts Payable Interest Payable Unearned Service Revenue Notes Payable Common Stock Preferred Stock Paid in capital in excess of par-Preferred Stock Retained Earnings Dividends Sales Revenue Sales Discounts Service Revenue Cost of goods sold Salaries expense Rent expense Utilities expense Supplies expense Depreciation expense Interest expense Totals Post Closing TB Debit Credit 95,790 900 2,000 320 250 11,000 15,000 125 1,700 208 320 25,000 60,000 3,000 34,500 407 1,400 800 25,000 60,000 3,000 34,500 125 1,700 208 320 25,000 60,000 3,000 34,500 700 700 3,400 3,400 10 10 1,600 2,080 680 1,500 680 1,500 1,000 300 550 125 208 130,333 129,700 129,700 130,333 125,260 125,260

Closing entries 31-May Sales Revenue Service Revenue Income Summary $ $ 3,400 2,080 $ 5,480 $ 4,373 31-May Income Summary Sales Discounts Cost of goods sold Salaries expense Rent expense Utilities expense Supplies expense Depreciation expense Interest expense $ $ $ $ $ $ $ 10 680 1,500 1,000 300 550 125 208 $ 1,107 31-May Income Summary Retained Earnings $ 1,107 $ 700 31-May Retained Earnings Dividends $ 700