Lalit has decided to open up his own juice bar and incorporated his new business, JuiceHeads Inc. (JH), on July 1, 20x3. He invested $20,000 of his own funds and took back 100 common shares in return. He 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. He has decided that December 31st will be the business’ year end. The following information is also available: 1. On July 1St, 20x3, JH entered into a 1-year lease for its retail location. 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 20x3 –July 31st 20x4. 5. Lalit offered an annual subscription to a "Juice a day" program. It went on sale August 1st and 50 people bought such memberships for $1,100 each on that day with cash. No other annual memberships were purchased in 20x3. 6. Sales for the period of August 1 - December 31, other than the memberships above, were $50,000 in cash, and $23,000 was paid for COGS during the same period. 7. On December 15th, 20x3, JH declared a dividend of $4,000. It has not yet been paid. Required – Record all necessary initial and adjusting journal entries for the accounting events described above.
Lalit has decided to open up his own juice bar and incorporated his new business, JuiceHeads Inc. (JH), on July 1, 20x3. He invested $20,000 of his own funds and took back 100 common shares in return. He 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. He has decided that December 31st will be the business’ year end. The following information is also available: 1. On July 1St, 20x3, JH entered into a 1-year lease for its retail location. 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 20x3 –July 31st 20x4. 5. Lalit offered an annual subscription to a "Juice a day" program. It went on sale August 1st and 50 people bought such memberships for $1,100 each on that day with cash. No other annual memberships were purchased in 20x3. 6. Sales for the period of August 1 - December 31, other than the memberships above, were $50,000 in cash, and $23,000 was paid for COGS during the same period. 7. On December 15th, 20x3, JH declared a dividend of $4,000. It has not yet been paid. Required – Record all necessary initial and adjusting journal entries for the accounting events described above.
Chapter6: Business Expenses
Section: Chapter Questions
Problem 68P
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Transcribed Image Text:Lalit has decided to open up his own juice bar and incorporated his new business, JuiceHeads Inc. (JH), on July 1, 20x3. He invested $20,000 of his own funds and took
back 100 common shares in return. He 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 30n.
He has decided that December 31st will be the business' year end.
The following information is also available:
1. On July 15t, 20x3, JH entered into a 1-year lease for its retail location. 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 5n, 20x3, office supplies of $650 were purchased on account. At year end, there are $350 of office supplies still on hand.
4. On July 28tn, 20x3, the insurance premium of $3,000 was paid with cash. The insurance covers the period August 1st 20x3 –July 31st 20x4.
5. Lalit offered an annual subscription to a "Juice a day" program. It went on sale August 1st and 50 people bought such memberships for $1,100 each on that day
with cash. No other annual memberships were purchased in 20x3.
6. Sales for the period of August 1 - December 31, other than the memberships above, were $50,000 in cash, and $23,000 was paid for COGS during the same
period.
7. On December 15th, 20x3, JH declared a dividend of $4,000. It has not yet been paid.
Required –
Record all necessary initial and adjusting journal entries for the accounting events described above.
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