Question

5. (30 pts) Stohr Company (a lighthouse consulting company) completed the transactions given below. The company prepares financial statements every month and the company's year-end is December 31st Please prepare journal entries for each a) January 20, 2012 - Issued capital stock to a new stockholder for $10,000 cash b) January 31, 2012 - Received twelve months rent in advance (on a warehouse) - total $36.000 c) February 28, 2012 - Record any entry necessary relating to the warehouse rental. d) February 28, 2012-Paid management salaries for March - total $80,000. e) March 31, 2012 - Record any entry necessary relating to the management salaries. f) April 1, 2012 -- Purchased a computer for $12,000, paying $3,000 down and signing a note for the remainder. The note bears interest at 15% and is due May 31, 2008. The computer has a three-year useful life and no salvage value. It will be depreciated on a straight-line basis. g) April 30, 2012 - Record any entries necessary relating to the computer and the debt on the computer. h) May 1, 2012 - Purchased and paid for supplies for $4,000. These supplies were placed in the storeroom. This was the only supplies purchase this month. At the beginning of the month the company had $1,000 of supplies on hand. i) May 31, 2012-The supplies on hand are valued at $500. Prepare any necessary entry j) May 31, 2012 - Record the payment of the computer debt -- f) above. k) June 30, 2012 - Provided consulting services to dients totaling $10,000 and received $7,000 cash. The remainder will be received in one month. 1) July 30, 2012 -- Received payment in fullfor the services recorded above, at June 30th. m) July 31, 2012-Signed a contract to provide advertising serves totaling $100,000 over the next year.

Answer 1

5

Date	Account Titles	Debit	Credit
Jan-20	Cash	$ 10,000.00
	Common Stock		$      10,000.00
	(Issue of stock)
Jan-31	Cash	$ 36,000.00
	Unearned Rent Revenue		$      36,000.00
	(Received rent for 12 months in advance)
Feb-28	Unearned Rent Revenue	$    3,000.00		=36000/12
	Rent Revenue		$         3,000.00
	(Rent revenue recorded for February)
Feb-28	Salaries Expense	$ 80,000.00
	Cash		$      80,000.00
	(Paid salaries for Februrary)
Mar-31	Salaries Expense	$ 80,000.00
	Salaries Payable		$      80,000.00
	(Salary expense for March)
Apr-01	Computer	$ 12,000.00
	Cash		$         3,000.00
	Note Payable		$         9,000.00
	(Purchase of computer)
Apr-30	Depreciation Expense	$        333.33		=12000/36
	Accumulated Derpeciation		$            333.33
	(Depreciation recorded for 1 month)
	Interest Expense	$        112.50		=9000*15%*1/12
	Interest Payable		$            112.50
	(Interest accrued for 1 month)
May-01	Supplies	$    4,000.00
	Cash		$         4,000.00
	(Purchased supplies for cash)
May-31	Supplies Expense	$    4,500.00		=4000+1000-500
	Supplies		$         4,500.00
	(Supplies consumed during the period)
May-31	Note Payable	$    9,000.00
	Interest Payable	$        112.50		=9000*15%*1/12
	Interest Expense	$        112.50		=9000*15%*1/12
	Cash		$         9,225.00
	(Payment of note on maturity)
Jun-30	Cash	$    7,000.00
	Accounts Receivable	$    3,000.00
	Service Revenue		$      10,000.00
Jul-30	Cash	$    3,000.00
	Accounts Receivable		$         3,000.00
	(Collection from customers)
Jul-31	No entry