Question

Based on the unadjusted trial balance pictured, please show the journal entries for the questions, using the account names shown in the trial balance.

Cr Cash Accounts Receivable Allowance for Doubtful Accounts Short Term Note Receivable 112,000 127,000 1,000 50,000 65,000 62,000 75,000 0 Invento uipment Building Accumulated Depreciation Copyright Accounts Payable Dividends Payable Interest Payable Unearned Revenue ST Note Payable LT Mortgage Payable Bonds Payable Premium on Bonds Payable Common Stock $1.75 par Paid In Capital In Excess of Par-CS Preferred Stock-$5 par Paid In Capital In Exess of Par-PS Treasury Stock Retained Earnings Dividends Sales Revenue Sales Returns& Allowances Sales Discounts Cost of Goods Sold Bad Debts Expense Depreciation Expense Wages Expense Rent Expense Insurance Expense Supplies Expense Interest Revenue Interest Expense Gain on Sale of Equipment Income Tax Expense Total 32,000 106,000 12,000 22,000 45,000 125,000 16,840 175,000 86,000 1,000 50,000 3,500 2,000 480,160 10,000 3,000 46,000 30,000 26,000 60,000 98,000 25,000 16,000 1,000 15,000 1,065,500 1,065,500 6,500 46,000 1. The company purchased a building December 1, 2017 with a LT Mortgage Payable of $300,000 at 8% interest. (Record the purchase of the building.) 2. The company issued 1,000 shares of Common Stock for $6,000 on December 25, 2017. 3. On December 29, 2017 the company declared a cash dividend of $3.00 per share for common stock on the shares issued and declared (including the additional 1,000 shares issued on December 25th.) 4. The terms of the LT mortgage payable from #1 above require the company to make monthly installment payments over the term of the loan. Each payment consists of interest on the unpaid balance of the loan and a reduction of loan principal. Record the first monthly payment of $3,800 on the LT Mortgage Payable on December 31, 2017. 5. The company last paid interest on the ST note payable on November 1, 2017. Record the accrued interest expense for the last 2 months of 2017, The annual interest rate is 8%. Round to nearest whole dollar. 6. The Bonds Payable and related Premium amounts on the Nov. trial balance relate to the Jan. 1, 2017 issuance of the following bonds: On Jan. 1, 2017, the company issued 10%, 10-year bonds when the market rate for similar investments was 8%. The company pays interest each year on January 1st. On Dec. 31, 2017, use the effective interest method of amortizing the premium on bonds payable to accrue the interest expense for 2017. Round your interest expense calculation to the nearest whole dollar. 7. The Unearned Revenue amount on the Nov. trial balance relates to amounts that the company previously collected in cash for sales that were to be completed in the future. The company completed some of these sales during December and now owes only $10,000 of that unearned revenue. Record the necessary adjustment for December 31, 2017. 8. On December 31, 2017, the company purchased 50 shares of its own Preferred Stock for Treasury Stock for $11 per share

Answer 1

55 Date 56 57 1-Dec Building 58 59 Account Title & Explanation Debit Credit 2017 300,000 Long term Mortgage Payable 300,000 (to record purchase of Building) 61 25-Dec Cash 62 63 64 6,000 Common Stock 1,750 4,250 Paid in Capital in excess of Par - CS (To record issue of Common Stock) 29-Dec Retained Earnings (100000 +1000)*3 66 303,000 Dividend Payable To record declaration of dividend) 303,000 69 70 71 72 73 74 75 76 31-Dec Long term Mortgage Payable 1,800 2,000 Interest expense (300000*8% *1/12) Cash 3,800 To reord first payment) 31-Dec Interest Expense (45000*8%*2/12) Interest Payable 600 600 To record accrued interest expense) 78

31-Dec Interest expense (125000 *8%) 10,000 2,500 Premium on Bonds Payable 80 81 82 83 84 31-Dec Unearned Revenue (22000-10000) 85 86 87 88 89 90 91 92 Interest Payable (To record accrual of interest and amortization of premium) 12,500 12,000 Sales Revenue 12,000 (To record salesrevenue earned during the Year) 31-Dec Treasury Stock 550 Cash 550 To record purchase of treasury stock)