Discuss the below:
Q: Davis Uniform Corporation operates a store that sells uniforms. The following are the transactions that occurred during the first quarter of operations- Jan. 1 to Mar. 31, 2017.
Jan. 1 Davis issues 20,000 shares of $1 par value common stock with an issuing price of $10 per share.
Jan. 2 Purchased furniture and fixtures from Acme Furniture for $14,400 cash.
Jan. 4 Purchased $1,600 of office supplies for cash.
Jan. 15 Paid $36,000 in advance for one year's rent on the store building. The rent begins with
Jan 15. The company counts January for half a month.
Jan. 31 Paid salaries to employees for the first month, $3,600.
Feb. 1 Purchased $62,400 of uniforms inventory on account from the Birdwell Uniforms Manufacturing Company.
Feb. 1 Borrowed $66,000 from a local bank and signed two notes. The first note of $21,000 requires payment of principal in six months with annual interest rate at 4%. The second note of $45,000 requires the payment of principal in two years and annual interest payment with annual interest rate at 5%.
Feb. 6 Sold uniforms on account to St. Jude's School for $7,200. Cost of the uniforms sold is $4,800.
Feb. 9 Paid Birdwell Uniforms Manufacturing Company $50,000 for the purchase on Feb. 1.
Feb. 20 Sold uniforms to a chemical factory for $79,200 cash. Cost of the uniforms sold is $47,520.
Feb. 23 Purchased $10,000 of uniforms inventory on account from the Birdwell Uniforms Manufacturing Company.
Feb. 28 Paid salaries to employees for the month of February, $4,200.
Mar. 1 Sold uniforms to the football team of Robert Lee High School, and accepted a $12,000,three-month, note receivable with annual interest rate at 5%. Cost of the uniforms sold is $9,600.
Mar. 1 Subleased a portion of the building to a jewelry store. Received $3,000 in advance for three months' rent beginning on Mar. 1.
Mar. 3 Some uniforms were returned by the chemical factory which made a purchase on
Feb. 20. The selling price and cost of the returned uniforms is $7,200 and 4,320, respectively. Cash of $7,200 is refunded to the customer.
Mar. 23 Paid Birdwell Uniforms Manufacturing Company $14,400 for the purchases in Feb.
Mar. 25 Received $5,800 cash from St. Jude's School.
Mar. 30 The corporation announced and paid its shareholders cash dividends of $2,500.
Requirements:
Q: Record adjusting entries in General Journal and post to the general ledger accounts.
ADDITIONAL INFORMATION:
1. At the end of March, $1,000 of supplies remained.
2. The furniture and fixtures have a useful life of six years and will be worthless at the end of their useful life.
3. Salaries for the month of March are $4,800, and will be paid in April.
4. The company's management estimated that of the $1,400 remaining on account from St.
Jude's School, $200 would be uncollectible.
5. Income tax rate applied to the company is 30%.