INTERMEDIATE ACCOUNTING
3rd Edition
ISBN: 9780136946694
Author: GORDON
Publisher: RENT PEARS
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Textbook Question
Chapter 4, Problem 4.2P
Transaction Analysis; Journal
- January 4: Owners invested $400,000 (the par value of the stock) in exchange for 40,000 shares of common stock.
- January 31: Branton purchased an office building for $320,000 and paid for the purchase with a note payable. Interest in the amount of $16,000 will be due annually on January 31 of each year, beginning in 2019.
- February 1: Branton rented out a portion of its office building to another company. The renter signed a rental lease for the period of February 1, 2018, to January 31, 2019, and paid the annual rent amount of $60,000 upfront in cash.
- March 1: Branton paid $12,000 cash for administrative expenses.
- March 28: Branton purchased supplies in the amount of $42,000 on account with the supplier.
- April 8: Branton purchased a one-year insurance policy that runs from May 1, 2018, to April 30, 2019, in the amount of $62,000 and paid for the policy in full in cash.
- May 1: Branton recorded sales revenue in the amount of $240,000 that was received in cash from customers. Ignore Cost of Goods Sold.
- July 6: Branton paid employees $34,000 in wages in cash.
- September 30: Branton recorded $320,000 in sales revenue. Of this amount, $200,000 was paid in cash and the remainder was on account. Ignore Cost of Goods Sold.
- October 31: Branton received a cash payment from a customer in the amount of $40,000 to be applied to its account balance related to the September 30 sale.
- November 15: Branton purchased supplies in the amount of $26,000 on account with the vendor.
- December 1: Branton recorded sales revenue in the amount of $222,000, all on credit. Ignore Cost of Goods Sold
- December 22: Branton received a legal bill for $14,000, which it will pay when due in February 2019.
Note: Branton records straight-line
Required
- a. Prepare the journal entries for the transactions. Omit explanations.
- b. Show the
accounting equation effect of each of these transactions. - c. Prepare any necessary year-end adjusting journal entries for these transactions.
- d. Show the accounting equation effect of each of the adjusting journal entries.
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The following transactions apply to Hooper Co. for 2018, its first year of operations:
Issued $60,000 of common stock for cash.
Provided $90,000 of services on account.
Collected $78,000 cash from accounts receivable.
Loaned $20,000 to Mosby Co. on November 30, 2018. The note had a one-year term to maturity and a 6 percent interest rate.
Paid $26,000 of salaries expense for the year.
Paid a $2,000 dividend to the stockholders.
Recorded the accrued interest on December 31, 2018 (see item 4).
Estimated that 1 percent of service revenue will be uncollectible
Prepare the income statement, balance sheet, and statement of cash flows for 2018.
Vigeland Company completed the following transactions during Year 1. Vigeland’s fiscal year ends on December 31.
January 15
Purchased and paid for merchandise. The invoice amount was $15,200; assume a perpetual inventory system.
April 1
Borrowed $774,000 from Summit Bank for general use; signed a 10-month, 9% annual interest-bearing note for the money.
June 14
Received a $24,000 customer deposit for services to be performed in the future.
July 15
Performed $3,450 of the services paid for on June 14.
December 12
Received electric bill for $26,160. Vigeland plans to pay the bill in early January.
December 31
Determined wages of $15,000 were earned but not yet paid on December 31 (disregard payroll taxes).
Required:
Prepare journal entries for each of these transactions.
Prepare the adjusting entries required on December 31.
The following items were selected from among the transactions completed by Aston Mar-tin Inc. during the current year:
Apr. 15. Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.
May 1. Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%.
15. Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.)
July 14. Paid Audi Company the amount due on the note of May 15.
Aug. 16. Purchased merchandise on account from Exige Co., $90,000, terms, n/30.
Sept. 15. Issued a 45-day, 6% note for $90,000 to Exige Co., on account.
Oct. 28. Paid Spyder Manufacturing Co. the amount due on the note of May 1.
30. Paid Exige Co. the amount owed on the note of September 15.
Nov. 16. Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing a…
Chapter 4 Solutions
INTERMEDIATE ACCOUNTING
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