Question

AApp1-1 Journalize Transactions: The Fardy Information Management Inc. follows the expedient recording method. It engaged in transactions during the month of May: a. Paid $8,500 for May rent. b. Bought $5,300 of office supplies on account. c. Payroll for May was $72,000. Employees were paid $54,800, and the remainder was payroll deductions (income tax etc.) All payroll deductions were immediately remitted to the Receiver General. d. Customers were billed $ 105,400 for completed assignments. Page 788 e. Utilities of $3,950 were paid. f. Declared a cash dividend of $1.70 per preferred share and $0.80 per common share, payable 6 June. There are 60,000 preferred shares and 180,000 common shares outstanding. g. Sold used computer equipment with an original cost of $53,700 accumulated depreciation to date of $49,200, for $7,000. h. Paid suppliers $4,000 on account for supplies in (b). i. Collected $81,900 from customers on account in (d). Required: 1. Journalize each of the above transactions in general journal form. 2. Which entries would be different if the standard recording method were used? Repeat these entries, using the standard reporting method. Explain how the (eventual) adjusting journal entries for these accounts would be different under this approach. 3. Indicate in which journal each transaction would normally be recorded, assuming that the company keeps a journal for purchases (merchandise for resale/inventory purchases), sales, cash receipts, cash disbursements, and also a general journal.

Answer 1

51 52 Credit 53 a) Debit 8,500 Account Title & Explanation Rent expense Cash (To record rent paid) 54 8,500 55 56 57 b) 58 5,300 Office Supplies Accounts Payable (To record purchase of Office Supplies) 5,300 59 60 72,000 61 C) 62 Payroll expense Cash Income Tax Payable (To record payroll expense) 48,000 24,000 63 64 65 66 24,000 67 Income Tax Payable Cash (To record income tax remitted to the receiver) 24,000 68 105,400 69 70 d) 71 72 Accounts Recevable Service Revenue (To record customers billed) 105,400

3,950 Utilities expense Cash (To record utilities expense paid) 3,950 74 e) 75 76 77 78 f) 79 30 31 246,000 Retained Earnings Preferred Dividend Payable (60000*1.70) Common Dividend Payable (180000*.80) (To record declaration of dividend) 102,000 144,000 32 B3 g) 34 7,000 49,200 Cash Accumulated depreciation Gain on sale of Computer Equipment Computer Equipment (To record sale of Computer) 2,500 53,700 4,000 35 36 37 38 39 h) 30 21 22 93 i) 24 35 Accounts Payable Cash (To record amount paid to suppliers) 4,000 81,900 Cash Accounts Receivable (To record cash collected) 81,900

97 98 Note; As Per Chegg Policy we are allowed to answer first question if there are different questions and I have answered the first question completely with all the Journal entries. 99 100 101 102