1. The following transactions relate to the business of Patrick Jones. He decides that the accounting period should end on March 31st. of every year. Invested the following to start the business: Cash $20,000; Furniture that cost him $10,000 but with a market value of $7,500; equipment with a book value of $12,000. Borrowed from Town Bank $10,000 at an interest rate of 9% p.a. 2018 Jan 1. 1. 10. 30. Mar 31. Apr. 1 Invested $ 10,000 in the business in cash. Records were correctly made. Withdrew for personal use $ 2,000 in cash and correctly recorded in the books. Determined that the total sales for the 3 months amounted to $ 90,000 (cash sales amounted to $60,000 and the balance on credit), cost of goods sold was $ 50,000 (On account purchases amounted to $20,000 and the balance was for cash), and other operating expenses amounted to $ 15,000, excluding interest on loan which is payable in April. The net income is to be transferred to owner's equity account. Paid the interest on the loan taken on January 1, in cash. Required: A. Show necessary journal entries for the above transactions. Also show the entry for the transfer of the net income to equity account. (Capital A/C) Search D

1. The following transactions relate to the business of Patrick Jones. He decides that the accounting period should end on March 31st. of every year. Invested the following to start the business: Cash $20,000; Furniture that cost him $10,000 but with a market value of $7,500; equipment with a book value of $12,000. Borrowed from Town Bank $10,000 at an interest rate of 9% p.a. 2018 Jan 1. 1. 10. 30. Mar 31. Apr. 1 Invested $ 10,000 in the business in cash. Records were correctly made. Withdrew for personal use $ 2,000 in cash and correctly recorded in the books. Determined that the total sales for the 3 months amounted to $ 90,000 (cash sales amounted to $60,000 and the balance on credit), cost of goods sold was $ 50,000 (On account purchases amounted to $20,000 and the balance was for cash), and other operating expenses amounted to $ 15,000, excluding interest on loan which is payable in April. The net income is to be transferred to owner's equity account. Paid the interest on the loan taken on January 1, in cash. Required: A. Show necessary journal entries for the above transactions. Also show the entry for the transfer of the net income to equity account. (Capital A/C) Search D

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 7EB: McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they...

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