Question

2 through 8 please.

In addition to purchasing the franchise, Top Quality Appliance-Long Beach will also purchase land with an existing building to use for its retail store, store fixtures, and office equipment. The business will purchase appliances from TQA and resell them in its store, primarily to local building contractors for installation in new homes Following is the chart of accounts for Top Quality Appliance-Long Beach. As a new business, all beginning balances are SO Top Quality Appliance-Long Beach Chart of Accounts Cash Petty Cash Accounts Receivable Allowance for Bad Debts Merchandise Inventory Office Supplies Prepaid Insurance Interest Receivable Notes Receivable Land Building Accumulated Depreciation-Building Store Fixtures Accumulated Depreciation-Store Fixtures Office Equipment Accumulated Depreciation-Office Equipment Franchise Accounts Payable Interest Payable Notes Payable Common Stock Retained Earnings Dividends Sales Revenue Interest Revenue Cost of Goods Sold Franchise Fee Expense Salaries Expense Utilities Expense Insurance Expense Supplies Expense Bad Debt Expense Bank Expense Credit Card Expense Depreciation Expense-Building Depreciation Expense-Store Fixtures Depreciation Expense-Office Equipment Amortization Expense-Franchise Interest Expense Cash Short and Over Top Quality Appliance-Long Beach completed the following transactions during 2018, its first year of operations: nterest Receiváble Notes Receivable Land Building Accumulated Depreciation-Building Store Fixtures Accumulated Depreciation-Store Fixtures Credit Card Expense Office Equipment Accumulated Depreciation-Office Equipment Depreciation Expense-Store Fixtures Franchise Accounts Payable Interest Payable Notes Payable Utilities Expense Insurance Expense Supplies Expense Bad Debt Expense Bank Expense Depreciation Expense-Building Depreciation Expense--Office Equipment Amortization Expense-Franchise Interest Expense Cash Short and Over Top Quality Appliance-Long Beach completed the following transactions during 2018, its first year of operations: Received $500,000 cash and issued common stock. Opened a new checking account at Long Beach National Bank and deposited the cash received from the stockholders. a. b. Paid $50,000 cash for a TQA franchise. Paid $200,000 cash and issued a $400,000, 10-year, 5% notes payable for land with an existing building. The assets had the following market values: Land, $100,000; Building, $500,000 d. Paid 575,000 for store fixtures Plant Assets, Nat Beginning Balance, January 1, 2018 Deposits and other credits: $500,000 78,400 215,000 350,000 715,000 1,565 Interest Revenue 1,859,965 Checks and other debits: EFT to Bank Checks(1) Checks 125 50,000 200,000 45,000 75,000 150 3,600 600 300,000 500,000 192,650 2,340 (1,369,465) $ 490,500 Bank service charge Ending balance, December 31, 2018 (Bank Checks is a company that prints business checks (considered a bank expense) for Top Quality Appliance-Long Beach 4. In preparation for preparing the adjusting entries, complete depreciation schedul for the first five years for the depreciable plant assets, assuming the assets were e. Paid $45,000 for office equipment f. Paid $600 for office supplies. g. Paid $3,600 for a two-year insurance policy. h. Purchased appliances from TOA (merchandise inventory) on account for $425,000 i. Established a petty cash fund for $150. j. Sold appliances on account to B&B Contractors for $215,000, terms n/30 (cost, $86,000). k. Sold appliances to Davis Contracting for $150,000 (cost, $65,000), receiving a 6-month, 8% note. I. Recorded credit card sales of $80,000 (cost, $35,000), net of processor fee of 2%. m. Received payment in full from B&B Contractors. n. Purchased appliances from TQA on account for $650,000. o. Made payment on account to TQA, $300,000. p. Sold appliances for cash to LB Home Builders for $350,000 (cost, $175,000). q. Received payment in full on the maturity date from Davis Contracting for the note. r. Sold appliances to Leard Contracting for $265,000 (cost, $130,000), receiving a 9-month, 8% note. s. Made payment on account to TQA, $500,000 t. Sold appliances on account to various businesses for $985,000, terms n/30 (cost, $395,000). u. Collected $715,000 cash on account. v. Paid cash for expenses: Salaries, $180,000; Utilities, $12,650 w. Replenished the petty cash fund when the fund had $62 in cash and petty cash tickets for $85 for office supplies. x. Paid dividends, $5,000. y, Paid the franchise fee to TQA of 5% of total sales of $2,045,000. Requirements 1. Record the transactions in the general jaurnal mit r. Sold appliances to Leru contuctin 9-month, 8% note. s. Made payment on account to TQA, $500,000. t. Sold appliances on account to various businesses for $985,000, term (cost on account to various businesses for $985,000, terms n/ (cost, $395,000). u. Collected $715,000 cash on account. v. Paid cash for expenses: Salaries, $180,000; Utilities, $12,650 w. Replenished the petty cash fund when the fund had $62 in cash and petty cash tickets for $85 for office supplies. Paid dividends, $5,000. Paid the franchise fee to TQA of 5% of total sales of $2,045,000. x. y, Requirements 1. Record the transactions in the general journal. Omit explanations. 2. Post to the general ledger. 3. It is a common business practice to reconcile the bank accounts on a monthly basis. However, in this problem, the reconciliation of the company's checking account will be done at the end of the year, based on an annual summary. Reconcile the bank account by comparing the following annual summary ment from Long Beach National Bank to the Cash account in the general ledger. Record journal entries as needed and post to the general ledger. Use transaction z as the posting reference. 150 3,600 600 300,000 500,000 192,650 2,340 (1.369,465) $ 490,500 Bank service charge nce, December 31, 20183 ()Bank Checks is a company that prints business checks (considered a bank expense) for Top Quality Appliance-Long Beach . In preparation for preparing the adjusting entries, complete depreciation schedules for the first five years for the depreciable plant assets, assuming the assets were purchased on January 2, 2018: a. Building, straight-line, 30 years, $50,000 residual valuc. b. Store Fixtures, straight-line, 15 years, no residual value. c. Office Equipment, double-declining-balance, 5 years, $5,000 residual value 5. Record adjusting entries for the year ended December 31, 2018: a. One year of the prepaid insurance has expired. b. Management estimates that 5% of Accounts Receivable will be uncollectible. c. An inventory of office supplies indicates $475 of supplies have been used. d. Calculate the interest earned on the outstanding Leard Contracting note receivable. Assume the note was received on October 31. Round to the near- est dollar. e. Record depreciation expense for the year. f. Record amortization expense for the year on the franchise, which hasa 10-year life. g Calculate the interest owed on the note payable. Assume the note was issued on anuary 1. 6. Post adjusting entries and prepare an adjusted trial balance. 7. Prepare a multi-step income statement and statement of retained earnings for the year ended December 31, 2018. Prepare a classified balance sheet as of December 31, 2018. Assume Interest Receivable is a current asset and Interest Payable is a current liability 8. Evaluate the company's success for the first year of operations by calculating the following ratios. Round to two decimal places. Comment on the results. a. Liquidity: i. Current ratio ii. Acid-test ratio iii. Cash ratio b. Efficiency: i. Accounts receivable turnover ii. Day's sales in receivables ii. Asset turnover iv. Rate of return on total assets

Answer 1

Ans-1	Journal Entries
			In $
Date/S. No.	Particulars	Debit	Credit
a)(i)	Cash	500000
	To Common stock		500000
	(being common stock issued)
a)(ii)	Long beach national park	500000
	To cash		500000
	(being cash deposited to long beach national park)
b)	TQA Franchise	50000
	To cash		50000
	(being cash paid to TQA Franchise)
c)(i)	Land with buildings	200000
	To cash		200000
	(Being cash paid for land and building purchased)
c)(ii)	5% Notes payable	400000
	To cash		400000
	(being notes payable issued)
d)	Store fixtures	75000
	To cash		75000
	(being amount paid for store fixtures)
e)	office Equipements	45000
	To cash		45000
	(being amount paid for office equipment)
f)	office supplies A/c	600
	To cash		600
	(being amount paid for office supplies )
g)(i)	Insurance policy	3600
	To cash		3600
	(being amount paid for 2years insurance policy)
g)(ii)	Prepaid insurance policy	3600
	To Insurance policy		3600
	(being amount transferred to prepaid account for next year)
	Note :It is assumed that company has 1year of financial year)
h)	Appliances	425000
	To TQA		425000
	(being appliances purchased)
i)	petty cash	150
	To cash		150
	(Being petty cash created)
j)	B & B Contractors	215000
	To Appliances		86000
	To profit and loss account(Profit)		129000
	(Being appliance sold to B&B Contractors)
k)(i)	To Devis appliances	150000
	To Appliances		65000
	To profit and loss account(Profit)		85000
	(Being appliance sold to Devis Appliances)
k(ii)	8% Note	150000
	To devis appliances		150000
	(Being Note Received)
l)(i)	Trade receivable	80000
	To sales		35000
	To profit and loss account(Profit)		45000
	(being sale made on account)
l(ii)	Processing fee	1600
	To bank		1600
	(being 2% of processing fee paid)
m)	Cash	215000
	To B& B Contractors		215000
	(Being cash received)
n)	Appliances	650000
	To TQA		650000
	(being appliances sold)
o)	TQA	300000
	To cash		300000
	(being amount received)
p)	LB Home builders	350000
	To Appliances		175000
	To profit and loss account(Profit)		175000
	(being appliances sold)
q)	8% Note	150000
	To Devis contracting		150000
	(being note received)
r(i)	Leard Contracting	265000
	To sales		130000
	To profit and loss account(Profit)		135000
	(being sale made)
r(ii)	8% Note	265000
	To Leard Contracting		265000
	(being note received)
s)	TQA	500000
	To cash		500000
	(being cash received)
t)	Trade receivables	985000
	To Appliances		395000
	To profit and loss account(Profit)		590000
	(being appliances sold)
u)	cash	715000
	To trade receivables		715000
	(being sale made)
v)	Salary expense	180000
	Utilities expense	12650
	To cash		192650
	(Being expenses paid)
x)	Dividend account	5000
	To Bank		5000
	(being dividend paid)
y)	TQA (Franchise fee)	102250
	To cash		102250
	(being 5% franchise fee paid)
Note 1 : it is assumed that amount paid in cash)
Note 2 : it is assumed that amount received in cash)