Chapter 1, Problem 7E

On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances:   During January 2021, the following transactions occur:January 1 Purchase equipment for $19,500. The company estimates a residual value of $1,500 and a five-year service life. January 4 Pay cash on accounts payable, $9,500. January 8 Purchase additional inventory on account, $82,900. January 15 Receive cash on accounts receivable, $22,000 January 19 Pay cash for salaries, $29,800. January 28 Pay cash for January utilities, $16,500. January 30 Firework sales for January total $220,000. All of these sales are on account. The cost of the units sold is $115,000. Required: 1. Record each of the transactions listed above. 2. Record adjusting entries on January 31. a. Depreciation on the equipment for the month of January is calculated using the straightline method. b. At the end of January, $3,000 of accounts receivable are past due, and the company estimates that 50% of these accounts will…

The following transactions occurred for the Microchip Company. 1. On October 1, 2024, Microchip lent $84,000 to another company. A note was signed with principal and 10% interest to be paid on September 30, 2025. 2. On November 1, 2024, the company paid its landlord $7.500 representing rent for the months of November through January. Prepaid rent was debited at the time of payment. 3. On August 1, 2024, collected $13,500 in advance rent from another company that is renting a portion of Microchip's factory. The $13,500 represents one year's rent and the entire amount was credited to deferred rent revenue at the time cash was received. 4. Depreciation on office equipment is $5,000 for the year. 5. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $8,500. The company records vacation pay as salaries expense. 5. Microchip began the year with $2,500 in its asset account, supplies. During the year, $7,000 in supplies were purchased and debited to…

Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2021. Required: Record any amounts as a result of each of these contingencies. 1. Accounts receivable were $29 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to be uncollectible, the company estimates that 3% of accounts receivable will eventually prove uncollectible. 2. Compact Electronics is the plaintiff in a $5 million lawsuit filed against a supplier. The suit is in final appeal, and attorneys advise it is virtually certain that Compact Electronics will win and be awarded $3.5 million.3. In November 2021, Compact Electronics became aware of a design flaw in one of its digital camera models. A product recall appears probable and would likely cost the company $600,000. 4. Compact Electronics is the defendant in a patent infringement lawsuit brought by a competitor. It appears reasonably…

Julius Ceasar organized Eternal Images, a photography and portrait studio, on Oct. 1, 2020.  The studio completed the following transactions during the month: Oct. 1 Deposited P350,000 in a bank account in the name of the business   Oct. 3 Paid two month's rent in advance, P30,000       Oct. 5 Acquired photography equipment valued at P129,000.     Oct.12 Purchased photography supplies on credit, P21,000.       Oct.13 Received cash for previously unbilled portraits, P11,400.     Oct.17 Billed customers for portraits, P22,500.       Oct.19 Paid fifty percent of the supplies purchased on Oct. 12, P10,500.   Oct.25 Paid electricity bill for Oct., P3,600         Oct.26 Paid the telephone bill for Oct., P2,100.       Oct.28 Received payments from the customers billed on Oct. 17, P7500.   Oct.29 Paid salaries to personnel, P12,000.         Oct.30 Received an advance payment from a customer, P1,500.     Oct.31 Withdrew P16,000 from the business for a personal…

Statsen Company, which prepares financial reports at the end of the calendar year, established a branch on July 1, 2020. The following transactions occurred during the formation of the branch and its first six months of operations, ending December 31, 2020.   1. The Home Office sent $35,000 cash to the branch to begin operations. 2. The Home Office shipped inventory to the branch. Intercompany billings totaled $75,000, which was the Home Office's cost. 3. The branch acquired merchandise display equipment which cost $15,000 on July 1, 2020. (Assume that branch fixed assets are carried on the home office books). 4. The branch purchased inventory costing $53,750 from outside vendors on account. 5. The branch had credit sales of $106,250 and cash sales of $43,750.   Requirements: 1. Prepare journal entries in the books of the home office and in the books of the branch office for the above transaction

Windsor, Inc. had the following transactions involving current assets and current liabilities during February 2022. Feb. 3   Collected accounts receivable of $17,100. 7   Purchased equipment for $36,200 cash. 11   Paid $5,500 for a 1-year insurance policy. 14   Paid accounts payable of $13,400. 18   Declared cash dividends, $6,400. Additional information:As of February 1, 2022, current assets were $133,940 and current liabilities were $36,200.Compute the current ratio as of the beginning of the month and after each transaction. (Round all answers to 2 decimal places, e.g. 1.83 : 1.)   Current ratio as of       Feb. 1,  2022   Enter the current ratio  :1 3      Enter the current ratio  :1 7      Enter the current ratio  :1 11      Enter the current ratio  :1 14      Enter the current ratio  :1 18      Enter the current ratio  :1

The accountant for Pili’s Gadgets Shop prepared the following list of account balances from the entity’s records for the year ended June 30, 2020: Sales Revenue $168,000   Cash $30,000 Accounts Receivable $14,500   Cost of Goods Sold $45,000 Equipment $48,000   Pili, Capital $27,000 Accounts Payable $17,000   Notes Payable $15,000 General & Admin Expense $50,000   Inventory $1,500 Selling Expense   $6,000   Accumulated Depreciation $12,000 Income Taxes Payable   $5,000   Income Taxes Expense $18,000 Interest Expense $3,000   Land $28,000   Additional Information: Last year’s ending inventory and accounts receivable balances were $3,500 and $10,000 respectively. Sales are on credit and the credit term is 21 days. Ms. Pili, the owner, praised the shop manager for successfully increased the sales level in the current year. Calculated ratios and the industry averages ratios in the related period are…

The following transactions occurred during 2024 for the Beehive Honey Corporation: February 1 Borrowed $12,000 from a bank and signed a note. Principal and interest at 10% will be paid on January 31, 2025. April 1 Paid $3,600 to an insurance company for a two-year fire insurance policy. July 17 Purchased supplies costing $2,800 on account. At the year-end on December 31, 2024, supplies costing $1,250 remained on hand. November 1 A customer borrowed $6,000 and signed a note requiring the customer to pay principal and 8% interest on April 30, 2025. Required: Record each transaction in general journal form. Prepare any necessary adjusting entries at the year-end on December 31, 2024. No adjusting entries were recorded during the year for any item.

McK Nursery, Incorporated, reports the following account balances on December 31, 2024: cash, $26,000; accounts receivable, $21,000; inventory, $35,000; equipment (net), $80,000; operating leases, $10,000; accounts payable, $24,000; salaries payable, $10,000; interest payable, $6,000; notes payable (due in 18 months), $40,000; common stock, $70,000. Required: Determine the year-end balance in retained earnings for McK Nursery, Incorporated. Retained earnings