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300. inventory costing $137,920 was purchased, all on account. licy was purchased on March 31 for $2,328. The insurance policy was for one yea

300. inventory costing $137,920 was purchased, all on account. licy was purchased on March 31 for $2,328. The insurance policy was for one yea

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prepare journal entries for each of the above transactions and adjusting items.(List all debit entries before credit entries.)
Sandhill Company started business on January 1, 2024. Some of the events that occurred in its first year of operations follow: Transactions 1. Equipment that cost $172,400 was purchased on February 1 for $43,100 cash plus a two-year, 4% note with a principal amount of $129,300. 2. During the year, inventory costing $137,920 was purchased, all on account. 3. An insurance policy was purchased on March 31 for $2,328. The insurance policy was for one year of coverage that began on April 1, 2024. 4. Sales to customers totalled $245,670. Of these, $56,030 were cash sales. 5. Payments to suppliers for inventory that had been purchased earlier totalled $68,960. 6. Collections from customers on account during the year totalled $155.160. 7. On January 30, customers paid $12.930 in advance payments for goods that will be delivered later. 8. Wages totalling $51,720 were paid to employees during the year. 9. The board of directors declared dividends of $8,620 in December 2024, to be paid in January 2025. Adjusting items 10. A physical count at year end revealed $34,480 of unsold inventory still on hand. 11. It was determined that 30% of the goods that were paid for in advance (in item 7) had been delivered to the customers by the end of the year. 12. Recorded the insurance expense for the year. 13. The equipment that was purchased (in item 1) on February 1, 2024, is to be depreciated using the straight-line method, with an estimated useful life of 20 years and an estimated residual value of $50,000. 14. Recorded the interest expense on the note payable for the year. 15. In addition to the wages that were paid during the year, wages of $5,172 remained unpaid at the end of the year.
Transcribed Image Text:Sandhill Company started business on January 1, 2024. Some of the events that occurred in its first year of operations follow: Transactions 1. Equipment that cost $172,400 was purchased on February 1 for $43,100 cash plus a two-year, 4% note with a principal amount of $129,300. 2. During the year, inventory costing $137,920 was purchased, all on account. 3. An insurance policy was purchased on March 31 for $2,328. The insurance policy was for one year of coverage that began on April 1, 2024. 4. Sales to customers totalled $245,670. Of these, $56,030 were cash sales. 5. Payments to suppliers for inventory that had been purchased earlier totalled $68,960. 6. Collections from customers on account during the year totalled $155.160. 7. On January 30, customers paid $12.930 in advance payments for goods that will be delivered later. 8. Wages totalling $51,720 were paid to employees during the year. 9. The board of directors declared dividends of $8,620 in December 2024, to be paid in January 2025. Adjusting items 10. A physical count at year end revealed $34,480 of unsold inventory still on hand. 11. It was determined that 30% of the goods that were paid for in advance (in item 7) had been delivered to the customers by the end of the year. 12. Recorded the insurance expense for the year. 13. The equipment that was purchased (in item 1) on February 1, 2024, is to be depreciated using the straight-line method, with an estimated useful life of 20 years and an estimated residual value of $50,000. 14. Recorded the interest expense on the note payable for the year. 15. In addition to the wages that were paid during the year, wages of $5,172 remained unpaid at the end of the year.
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