Question

Required information [The following information applies to the questions displayed below.] Aubrae and Tylor Williamson began operations of their furniture repair shop (Furniture Refinishers, Inc.) on January 1, 2019. The annual reporting period ends December 31. The trial balance on January 1, 2020, was as follows: Furniture Refinishers, Inc. Trial Balance on January 1, 2020 Account Titles Debit Credit Cash 8,000 Accounts receivable 7,000 Supplies 2,000 Small tools 11,000 Equipment Accumulated depreciation (on equipment) Other noncurrent assets (not detailed to simplify) 14,000 Accounts payable 9,000 Dividends payable Notes payable Wages payable Interest payable Income taxes payable Unearned revenue Common stock (90,000 shares, $0.10 par value) 9,000 Additional paid-in capital 12,000 Retained earnings 12,000 Service revenue Depreciation expense Wages expense Interest expense Income tax expense Miscellaneous expenses (not detailed to simplify) Totals 42,000 42,000 Transactions during 2020 follow: Borrowed $20,000 cash on July 1, 2020, signing a one-year, 10 percent note payable. Purchased equipment for $16,000 cash on July 1, 2020. Sold 20,000 additional shares of capital stock for cash at $.50 market value per share at the beginning of the year. Earned $110,000 in revenues for 2020, including $22,000 on credit and the rest in cash. Incurred $17,000 in wages expense and $13,000 in miscellaneous expenses for 2020, with $12,000 on credit and the rest paid with cash. Note: Wages are paid in cash. Purchased additional small tools, $6,000 cash. Collected accounts receivable, $10,000. Paid accounts payable, $14,000. Purchased $13,000 of supplies on account. Received a $6,000 deposit on work to start January 15, 2021. Declared a cash dividend on December 1, $15,000; paid on December 31. Data for adjusting entries: Supplies of $3,000 and small tools of $12,000 were counted on December 31, 2020 (debit Miscellaneous Expenses). Depreciation for 2020, $2,000. Interest accrued on notes payable (to be computed). Wages earned since the December 24 payroll but not yet paid, $8,000. Income tax expense was $9,000, payable in 2021

. Required: 1. Prepare journal entries for transactions (a) through (k). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare the adjusting entries for transactions (l) through (p). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1. Journal Entries -

Date Credit Furniture Refinishers, Inc. Journal Entries Accounts Title Cash Notes Payable (Being Notes Borrowed) Debit $ 20,000 a. $ 20,000 b. $ 16,000 Equipment Cash $ 16,000 (Being Equipment Purchased) C $ 10,000 Cash Common Stock Additional paid-in capital (Being Shares Issued) $ 2,000 $ 8,000 d $ 88,000 $ 22,000 Cash Accounts Receivable Service Revenue (Being Service revenue earned) $ 110,000 e $ 17,000 $ 13,000 Wages Expense Miscellaneous Expense Cash Accounts payable (Being Expense paid and accrued) $ 18,000 $ 12,000 f $ 6,000 Small Tools Cash $ 6,000 (Being Small Tools Purchased) g Cash $ 10,000 Accounts Receivable (Being Amount received on account) $ 10,000 h Accounts payable $ 14,000 Cash (Being payment made on account) $ 14,000 i Supplies $ 13,000 Accounts Payable (Being Supplies Purchased on account) $ 13,000 j $ 6,000 Cash Unearned Revenue (Being advance received) $ 6,000 k $ 15,000 Dividend Cash $ 15,000 (Being dividend Declared & Paid)

2. Adjusting Entries -

Credit Date 1 Furniture Refinishers, Inc. Adjusting Entries Accounts Title Debit Miscellaneous Expense $ 22,000 Small Tools Supplies (Being Small tools and Supplies Utilised) $ 10,000 $ 12,000 m Depreciation Expense $ 2,000 Accumulated depreciation (on equipment) (Being Depreciation Expense Incurred) $ 2,000 $ 1,000 Interest Expense Interest Payable (Being Interest Expense incurred) $1,000 O Wages Expense $ 8,000 Wages payable (Being Wages Expense incurred and accrued) $ 8,000 р Income tax expense $ 9,000 Income taxes payable (Being Income Tax Expense Incurred) $ 9,000