Question

“FOOD&ALL” a beverage Company has the following transaction following activities during Year 1:

1.1.January 1, Year 1: FOOD&ALL issues 10,000 shares of stock at €30 par share.

1.2.January 20, Year 1: FOOD&ALL purchases a building for €50,000 and purchases computer equipment for €20,000. It pays 50% of the price in cash and the other 50% through a bank loan.

1.3.March 10, Year 1: FOOD&ALL acquires finished goods (FOOD&ALL beverage) for €30,000. FOOD&ALL pays cash for 50% of the merchandise and the remainder goods are purchased on account.

1.4.March 30, Year 1: FOOD&ALL pays €30,000 in employee salaries.

1.5.July 1, Year 1: FOOD&ALL decides to rent additional building space and pays for six months’ rent, at €2000 a month.

1.6.August 31, Year 1: FOOD&ALL sells all of the finished goods for €500,000, of which €300,000 is received 1 month later and the remainder is received in cash. Remember to book the accurate COGS (Cost of Good Sold) for 6% of the sales. FOOD&ALL expects to collect 90% of its credit sales.

1.7.October 30, Year 1: FOOD&ALL collects €100,000 in cash from its accounts receivable, and uses this money to pay down its accounts payable.

1.8.December 30, Year 1: amortization period for the building is 10 years and 3 years for the equipment.

1.9.December 30, Year 1: FOOD&ALL has an expense of €50,000 for travelling that should be paid during the same month.

1.10. December 30, Year 1: FOOD&ALL pays €150,000 in dividends.

Pass journal entries to record the above transactions.

Answer 1

1.1.	Cash (10000*30)	300000
	Common stock		300000
1.2.	Building	50000
	Computer equipment	20000
	Cash		35000
	Notes payable		35000
1.3.	Finished goods inventory	30000
	Cash		15000
	Accounts payable		15000
1.4.	Salaries expense	30000
	Cash		30000
1.5.	Prepaid rent	12000
	Cash		12000
1.6.	Accounts receivable	200000
	Cash	300000
	Sales		500000
	Cost of goods sold (500000*6%)	30000
	Finished goods inventory		30000
1.7.	Cash	100000
	Accounts receivable		100000
	Accounts payable	100000
	Cash		100000
1.8.	Depreciation expense-Building	5000
	Depreciation expense-Equipment	6667
	Accumulated depreciation-Building		5000
	Accumulated depreciation-Equipment		6667
1.9.	Travelling expense	50000
	Accruals		50000
1.1.	Dividends	150000
	Cash		150000