Brian Burns uses perpetual inventory system and LIFO All credit sales discounts are recorded using the net method – customers receive a 3 percent discount if they pay within 30 days. Purchase discounts are recorded using the net method All depreciation is straight line. Additional Information for Journal Entries Brian Burns records accruals for utilities expense as an adjusting journal entry at the end of each year. They pay utilities once a year on January 31st for the prior year. NOTE: There is no payment for utilities on January 31st of 2022 because January 1 of 2022 is the first day of operations. January 1 Sold 10,000 shares of common stock for $95 per share. Borrowed $2,000,000 at 8 percent with interest payable semi-annually (on July 1 and January 1). Purchased 1,000 units of inventory at $150 a piece on credit from Biggie Smalls Inc. Terms are 2/10; n/60 Paid $480,000 for 2 years of rent in advance Purchased office supplies costing $10,000 with cash Jan 20 Paid Biggie full amount owed Feb 10 Sold 100 units inventory with a list price of $22,000 to M Jagger on credit. Sold 140 units of inventory for cash of $30,000. March 15 Bought 1,000 units of inventory at $170 a piece from Wolfpack Corporation with cash April 30 Sold 150 units of inventory for cash of $30,000 June 30 Purchased land and a building. A $200,000 cash down payment was required and a $800,000 note was accepted by the seller for the balance (12 percent interest payable each year on June 30). The fair value of the land at the date of purchase was deemed to be 300,000 and the fair value of the building was 900,000. The building has an estimated residual value of $0 and a useful life of 30 years. September 1 Brian Burns began subleasing extra space to DJ Moore. DJ Moore paid for $60,000 for six months’ in advance. October 1 Purchased equipment for in exchange for a $30,000 non-interest bearing note due in one year. The equipment has an estimated residual value of $2,000 and a useful life of 8 years. Note: Assume an effective interest rate of 8 percent. October 1 Purchased one year of insurance in advance for $12,000 October 14 Sold 400 units of inventory to H Gilmore for $100,000 on credit October 30 H Gilmore paid half of the amount owed Dec 1 Repurchased 1,000 shares of stock for $120/share Dec 15 Declared a dividend of $2/share. The dividend will be distributed to shareholders on January 19, 2022. Dec 15 H Gilmore went bankrupt so Brian Burns wrote off the balance owed by H Gilmore as uncollectible (hint: Directly write-off this Account since no allowance has been made yet). Dec 20 Purchased office supplies for $13,000 in cash. Dec 25 Sold 150 units of inventory to J Lennon for $30,000 on Credit Dec 31 Sold 1,000 units Inventory for $200,000 in Cash Information for Adjusting Entries as of 12/31/2022 A count of office supplies revealed $12,000 in office supplies as of 12/31/2022 Receive the 2022 utility bill for $25,000, payable on January 31st 2022. All depreciation is straight line. Brian Burns uses the balance sheet method for estimating bad debts and estimates that 5 percent of outstanding A/R at year-end will be uncollectible. The income tax rate for 2022 is 21%. *Remember to record any necessary accruals related to the transactions (e.g., interest expense, unearned rent) Can you show me the steps on how you solve them?
- Brian Burns uses perpetual inventory system and LIFO
- All credit sales discounts are recorded using the net method – customers receive a 3 percent discount if they pay within 30 days.
- Purchase discounts are recorded using the net method
- All
depreciation is straight line.
Additional Information for Journal Entries
Brian Burns records accruals for utilities expense as an adjusting
January 1 Sold 10,000 shares of common stock for $95 per share.
Borrowed $2,000,000 at 8 percent with interest payable semi-annually (on July 1 and January 1).
Purchased 1,000 units of inventory at $150 a piece on credit from Biggie Smalls Inc. Terms are 2/10; n/60
Paid $480,000 for 2 years of rent in advance
Purchased office supplies costing $10,000 with cash
Jan 20 Paid Biggie full amount owed
Feb 10 Sold 100 units inventory with a list price of $22,000 to M Jagger on credit.
Sold 140 units of inventory for cash of $30,000.
March 15 Bought 1,000 units of inventory at $170 a piece from Wolfpack Corporation with cash
April 30 Sold 150 units of inventory for cash of $30,000
June 30 Purchased land and a building. A $200,000 cash down payment was required and a $800,000 note was accepted by the seller for the balance (12 percent interest payable each year on June 30). The fair value of the land at the date of purchase was deemed to be 300,000 and the fair value of the building was 900,000. The building has an estimated residual value of $0 and a useful life of 30 years.
September 1 Brian Burns began subleasing extra space to DJ Moore. DJ Moore paid for $60,000 for six months’ in advance.
October 1 Purchased equipment for in exchange for a $30,000 non-interest bearing note due in one year. The equipment has an estimated residual value of $2,000 and a useful life of 8 years. Note: Assume an effective interest rate of 8 percent.
October 1 Purchased one year of insurance in advance for $12,000
October 14 Sold 400 units of inventory to H Gilmore for $100,000 on credit
October 30 H Gilmore paid half of the amount owed
Dec 1 Repurchased 1,000 shares of stock for $120/share
Dec 15 Declared a dividend of $2/share. The dividend will be distributed to shareholders on January 19, 2022.
Dec 15 H Gilmore went bankrupt so Brian Burns wrote off the balance owed by H Gilmore as uncollectible (hint: Directly write-off this Account since no allowance has been made yet).
Dec 20 Purchased office supplies for $13,000 in cash.
Dec 25 Sold 150 units of inventory to J Lennon for $30,000 on Credit
Dec 31 Sold 1,000 units Inventory for $200,000 in Cash
Information for
A count of office supplies revealed $12,000 in office supplies as of 12/31/2022
Receive the 2022 utility bill for $25,000, payable on January 31st 2022.
All depreciation is straight line.
Brian Burns uses the
The income tax rate for 2022 is 21%.
*Remember to record any necessary accruals related to the transactions (e.g., interest expense, unearned rent)
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