Question

The Byte of Accounting Corporation (Byte) sells turn-key computer systems to midsize businesses on account. Byte was started by Lauryn on January 1 of last year when she was issued 2,200 shares of stock.

- Perpetual FIFO will be used for the Super Toners.

- The allowance method is used to account for bad debts.

Transaction 01: December 1: an investor made an investment in Byte by purchasing 2,700 shares of its common stock paying $72,900 in cash. The par value of the common stock was $19.00 per share.

Transaction 02:  December 3:  Byte purchased a Ricoh Color Copier for $5,300.00.   The invoice number was 61298.  Byte paid 10% in cash and signed a three-year note for the remaining balance.  Interest at a rate of 6% a year will be paid semiannually.

Transaction 03: December 3: Check # 6001 for $2,400.00 was issued by Byte to pay for rent of the office space for December.

Transaction 04: December 3:  Byte received 13 Super Toners for resale to   customers at a cost of $20.00 per toner.  The invoice number was 7249, and requires payment within 30 days.

Transaction 05: December 10: Byte sold 8 Super Toners to a customer on account for $57.00 each. The Sales order number was 12100.

Transaction 06: December 10:  Byte records the cost of the 8 Super Toners sold using FIFO. The sales order number was 12100.

Transaction 07: December 11: Check # 6002 was issued to pay salaries of $2,000.00 to equipment operators. (Ignore payroll taxes at this time.)

Transaction 08: December 14: Check # 6003 was issued to purchase a one-year insurance policy covering its computer equipment.  The cost of the insurance is $6,360.00 and paid to Seth's Insurance.   The effective date of the policy was December 16 and the invoice number was 2387.

Transaction 09: December 15: Byte purchased $400.00 of supplies on account.

Transaction 10: December 16: Byte received 5 Super Toners purchased for resale to customers.   The cost was $22.00 per toner.  The invoice number was 7959, and payment is required in 30 days.

Transaction 11: December 17: Byte was informed that Mr. Madoff who has an account with the company will never pay the $590.00 he owes.  Record the transaction to write off Mr. Madoff's accounts receivable account using the allowance method.

Transaction 12: December 17: Byte received invoice number 26354 in the amount of $725.00 from the local newspaper for advertising.

Transaction 13: December 18: Check # 6004 was issued to pay Accounts Payable in the amount of $1,120.00.

Transaction 14: December 19:  Byte sold 6 Super toners to a customer on account for $57.00 each. The sales order number was 12101.

Transaction 15: December 19: Byte records the cost of the 6 Super Toners sold using FIFO. The sales order number was 12101.

Transaction 16: December 21:  Byte received an emailed invoice in the amount of $6,400.00 for computers that were drop shipped and received today.

Transaction 17: December 21:   Byte billed various miscellaneous local customers $12,800.00 for computers that were delivered today.

Transaction 18: December 21:  Record the cost of the computers that were sold today.

Transaction 19: December 22:   Check # 6005 was issued to pay salaries of $2,000.00 to equipment operators. (Ignore payroll taxes at this time.)

Transaction 20: December 22:   Byte received a bill for $1,265.00 from Computer Parts and Repair Co. for repairs to the computer equipment.   The invoice number was 43254.

Transaction 21: December 22:   Check # 6006 was issued to pay the advertising bill that was previously received and recorded from the local newspaper for advertising, invoice number 26354.

Transaction 22: December 22: Byte received 12 Super Toners purchased for resale to customers.  The cost was $24.00 per toner.   The invoice number was 8988, and payment is required in 30 days.

Transaction 23: 12/23: Byte received $21,575 from customers billed when they received delivery.

Transaction 24: December 23:  Byte received an emailed invoice in the amount of $7,650.00 for computers that were drop shipped and received today.

Transaction 25: December 28:   Byte billed various miscellaneous local customers $15,300.00 for computers that were delivered today.

Transaction 26: December 28:   Record the cost of the computers that were sold today.

Transaction 27: December 28: Byte paid the bill that was previously received and recorded from Computer Parts and Repairs Co with Check # 6007. The invoice number was 43254.

Transaction 28: 12/29:  Byte received $14,750 from customers billed when they received delivery.

Transaction 29: December 29:  Byte received a bill for the amount of $680.00 from AT&T for the telephone and internet access.   The invoice number was 784537.

Transaction 30: December 30:   Check # 6008 was issued to pay salaries of $2,000.00 to equipment operators. (Ignore payroll taxes at this time.)

Transaction 31: December 30: Check # 6009 was issued to pay a cash dividend of $.65 per share to Lauryn, a shareholder of Byte.

Transaction 32: December 30: Check # 6010 was issued to pay a cash dividend of $.65 per share to a shareholder of Byte.

Transaction 33: December 30: Byte received a $7,965.00 check from Corporation for merchandise ordered which will be delivered in January.

Transaction 34: 12/30: A $900 ping pong table for the office was ordered from GameWorld.

Transaction 35: 12/31: The Ping Pong table was canceled within the cancelation period.

Transaction 36: 12/31: Check # 6012 was issued to pay $680 to AT&T for telephone & internet access.

Transaction 37: The cash received and deposited from customers was $14,775.00 not the $14,750.00 orignially recorded.

Transaction 38: A physical inventory showed that only $526.00 worth of supplies remained on hand as of December 31.

Transaction 39: The interest on the note for the Ricoh Color Copier will be paid every six months. Record the December accrued interest on the note payable for the Ricoh purchased on December 1.

Transaction 40: Record a journal entry to reflect that one-half month's insurance has expired.

FOR JOURNAL ENTRY: #38, #39 and #40 ... I need an answer with the following:

1) Transaction Name

2) Transaction Debit amount

3) Transaction Credit amount

Answer 1

Journal entries for the transactions of 38,39,40

38 - supplies expenses A/c Dr. $126

Supplies in hand. $126 (526-400)

(Being $526 supplies in hand)

39- intrest expenses A/c. Dr.$23.85

Accured intrest. $23.85 (5300*90%*6%*1/12)

(Intrest expenses on the 6% note payable of 90% of $ 5300 for the month of December.)

40- Insurance expenses A/c. Dr. $ 265

Prepaid Insurance $265 (6360/12*0.5)

( Being half of the month's insurance is expired)