Prepare journal entries to record each of the following transactions. You do not need to write explanations below the journal entries.
Create general ledger accounts for each account and post each of the journal entries to an existing general ledger account.
Prepare adjusting journal entries as you deem necessary. Besides the information provided for adjusting journal entries, review the transactions and review your unadjusted trial balance for any other adjusting journal entries you may need to prepare.
Post each of the adjusting journal entries to the general ledger accounts.
Prepare closing entries and post the entries to the general ledger accounts.
Prepare trial balances as you deem necessary.
Prepare the following financial statements, in their proper format, for the month of January
Income statement
Statement of retained earnings
Balance sheet
Statement of Cash Flow
Shocker Electronics is a new company that distributes computer equipment to retail outlets. The following information pertains to Shocker Electronics during their first month of operations:
Suppliers sales price cost terms
Xtreme -game systems $ 3,000.00 2,400.00 1% 15, net 30
HP -office systems 2,000.00 1,700.00 1%/20, net/30
Gateway -home systems 900.00 720.00 2%/10, net/30
Customers
Cuesta Computer terms 2%/10 net 30
Mustang Computer terms 2%/10 net 30
SLO CPU terms 2%/10 net 30
walk-in customers cash only - no discount
Jan 1 Issued 10,000 shares of $1 par value common stock for $15 per share.
Jan 1 Made a $50,000 down payment and signed a $600,000 mortgage to purchase land and building, which will be used as the distribution center. The land comprised of three (3) lots which appraised at $132,000 each ($396,000 total) and the building appraised for $264,000. The building occupies one (1) lot, one (1) lot will serve as parking and WCD intends to sell the third lot.
The loan is a ten (10) year, 8.0% mortgage requiring monthly payments consisting of principle and interest. The first payment is due Feb. 1st. Please attach a loan amortization schedule.
Jan 1 Issued 100 bonds with $1,000 face value and 6% coupon rate. The bonds mature in ten (10) years and pay interest semi-annually on July 1st and January 1st. The bonds sell at a price to yield an 8% effective interest rate. The effective interest method will be used to amortize the bond premium or discount. Please attach a bond amortization schedule.
Jan 1 Borrowed $100,000 from First Bank to purchase shelving for the warehouse. The shelving cost $100,000 and is expected to last five (5) years. The note is a three (3) year, 9% note that requires principle and interest payments on the last day of each month. Please attach a loan amortization schedule
Jan 1 Purchase inventory
150 systems from Gateway at $720 per system terms 2%/10, net/30
100 systems from HP at $1,700 per system terms 1%/20, net/30
40 systems from Xtreme at $2,400 per system terms 1% 15, net 30
Jan 1 Paid $1,000 for supplies.
Jan 5 Sold Cuesta Computer sixty (60) Gateway sytstems and forty (40) HP systems, on account.
Jan 6 Paid Gateway bill in full (in the discount period)
Jan 10 Sold SLO CPU twenty-five (25) Xtreme systems.
Jan 14 Received payment in full from Cuesta Computer (in the discount period).
Jan 14 Sold Mustang Computer fifty (50) Gateway sytstems and fifty (50) HP systems.
Jan 14 Paid HP bill in full (in the discount period)
Jan 15 Purchase inventory
75 systems from Gateway at $720 per system terms 2%/10, net/30
50 systems from HP at $1,700 per system terms 1%/20, net/30
25 systems from Xtreme at $2,400 per system terms 1%/15, net 30
Jan 16 Paid salaries totaling $5,000 for the first half of the month. In order to make this entry you must know that 15% was withheld for federal income tax, 5% was withheld for state income tax, 7.65% (6.2% social security and 1.45% medicare) was withheld for FICA. Don't forget that the employer is also responsible for matching the employee's contribution to FICA. All taxes, both the employee's and employer's, are paid quarterly throughout the year.
Jan 20 Sold Cuesta Computerforty (40) Gateway systems and forty (40) HP systems, on account.
Jan 22 Sold SLO CPU twenty-five (25) Xtreme systems.
Jan 23 Received payment in full from Mustang Computers (in discount period).
Jan 24 Paid Gateway bill in full (in the discount period)
Jan 25 Received payment in full from SLO CPU. The first invoice was out of discount period and the second invoice was in the discount period.
Jan 27 Sold the extra parcel of land, which was held as an investment, for $125,000.
Jan 28 Paid Xtreme bill in full (first invoice out of the discount period)
Paid Xtreme bill in full (second invoice in the discount period)
Jan 29 Paid HP bill in full (in the discount period)
Jan 29 Received payment in full from Cuesta Computer (in the discount period).
Jan 30 Sold Mustang Computer fifty (50) Gateway systems and ten (10)HP systems.
Additional information
Accounts Receivable: Accounts receivable are evaluated at the end of each month. It is estimated that 2% of all accounts receivable will not be collected.
Inventory: The weighted average cost method is used to value product purchased from each supplier. Therefore, you will have to calculate inventory values and cost of goods sold by supplier. A periodic inventory system is utilized.
Depreciation on: building - 20 years, straight-line, no salvage value.
shelving - 5 years, double declining balance, no salvage value
Supplies worth $175 are on hand at the end of the month
Accrue salaries for the second half of the month (same amount as Jan. 16th salaries). These salaries will be paid on February 1st.