Janet Bendy decided to open up her own yoga studio and incorporated her new business, Bendy Yoga Inc. (BY), on July 1, 20x3. She invested $20,000 of her own funds and took back 100 common shares in return. She also obtained a 3-year bank loan for $50,000 on July 1st The loan bears interest of 6%. The interest is due annually on June 30th, She has decided that December 31st will be the business' year end. The following information is also available: 1. On July 1st, 20x3, BY entered into a 1-year lease for studio space. It paid the first and last month rent on that day. Monthly rent is $2,000. 2. On July 3rd, 20x3, equipment was purchased for $10,000 with cash. It is expected to have a 5-year useful life and no salvage value. They plan to use straight-line depreciation. 3. On July 5th, 20x3, office supplies of $650 were purchased on account. At year end, there are $350 of office supplies still on hand. 4. On July 28th, 20x3, the insurance premium of $3,000 was paid with cash. The insurance covers the period August 1st – July 31st. 5. Annual yoga memberships went on sale to the public on August 1st. 50 people bought such memberships for $1,100 each on that day with cash. No other annual memberships were purchased in 20x3. 6. On December 15th, 20x3, BY declared a dividend of $4,000. It has not yet been paid. 7. On December 31$st, 20x3, BY paid the dividend declared on December 15th. Required – Record all necessary initial and adjusting journal entries for the accounting events described above.
Janet Bendy decided to open up her own yoga studio and incorporated her new business, Bendy Yoga Inc. (BY), on July 1, 20x3. She invested $20,000 of her own funds and took back 100 common shares in return. She also obtained a 3-year bank loan for $50,000 on July 1st The loan bears interest of 6%. The interest is due annually on June 30th, She has decided that December 31st will be the business' year end. The following information is also available: 1. On July 1st, 20x3, BY entered into a 1-year lease for studio space. It paid the first and last month rent on that day. Monthly rent is $2,000. 2. On July 3rd, 20x3, equipment was purchased for $10,000 with cash. It is expected to have a 5-year useful life and no salvage value. They plan to use straight-line depreciation. 3. On July 5th, 20x3, office supplies of $650 were purchased on account. At year end, there are $350 of office supplies still on hand. 4. On July 28th, 20x3, the insurance premium of $3,000 was paid with cash. The insurance covers the period August 1st – July 31st. 5. Annual yoga memberships went on sale to the public on August 1st. 50 people bought such memberships for $1,100 each on that day with cash. No other annual memberships were purchased in 20x3. 6. On December 15th, 20x3, BY declared a dividend of $4,000. It has not yet been paid. 7. On December 31$st, 20x3, BY paid the dividend declared on December 15th. Required – Record all necessary initial and adjusting journal entries for the accounting events described above.
Chapter3: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 60P
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Transcribed Image Text:Janet Bendy decided to open up her own yoga studio and incorporated her new business, Bendy Yoga Inc. (BY), on July 1,
20x3. She invested $20,000 of her own funds and took back 100 common shares in return. She also obtained a 3-year bank loan
for $50,000 on July 1st The loan bears interest of 6%. The interest is due annually on June 30th. She has decided that December
31st will be the business' year end.
The following information is also available:
1. On July 1st, 20x3, BY entered into a 1-year lease for studio space. It paid the first and last month rent on that day.
Monthly rent is $2,000.
2. On July 3rd, 20x3, equipment was purchased for $10,000 with cash. It is expected to have a 5-year useful life and no
salvage value. They plan to use straight-line depreciation.
3. On July 5th, 20x3, office supplies of $650 were purchased on account. At year end, there are $350 of office supplies
still on hand.
4. On July 28th, 20x3, the insurance premium of $3,000 was paid with cash. The insurance covers the period August 1st –
July 31st.
5. Annual yoga memberships went on sale to the public on August 1st. 50 people bought such memberships for $1,100
each on that day with cash. No other annual memberships were purchased in 20x3.
6. On December 15th, 20x3, BY declared a dividend of $4,000. It has not yet been paid.
7. On December 31st, 20x3, BY paid the dividend declared on December 15th.
Required –
Record all necessary initial and adjusting journal entries for the accounting events described above.
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