**One Product Corporation (OPC) Financial Overview**At the end of its first year, OPC reported the following balances on its post-closing trial balance:- **Assets** - Cash: $22,000 - Accounts Receivable: $13,800 - Allowance for Doubtful Accounts: $1,355 - Inventory: $12,240 - Prepaid Rent: $1,940 - Equipment: $45,000 - Accumulated Depreciation: $4,400- **Liabilities** - Accounts Payable: $500 - Sales Tax Payable: $1,020 - FICA Payable: $650 - Withheld Income Taxes Payable: $500 - Salaries and Wages Payable: $1,200 - Unemployment Tax Payable: $300 - Deferred Revenue: $4,500 - Interest Payable: $2,300 - Notes Payable (long-term): $23,780- **Equity** - Common Stock: $22,000 - Additional Paid-In Capital, Common: $8,042 - Retained Earnings: $17,930 - Treasury Stock: $4,000**Operational Notes for January**- **Inventory**: OPC sells inventory at $150 per unit, plus a sales tax of 6%. Starting inventory consists of 180 units valued at $12,240 using FIFO and a perpetual inventory system.- **Prepaid Rent**: The $1,940 relates to a December payment covering January rent.**Equipment Information**- Equipment purchased on July 1 of the previous year with a residual value of $1,000 and a five-year lifespan, depreciated using the straight-line method.**Employee and Tax Details**- Employee wages are $4,000/month, paid twice monthly. Deductions per pay include $250 for income taxes and $150 for FICA taxes, with employer contributions matching FICA.- Additional $50 unemployment tax per pay period, paid monthly.- Deferred revenue from 30 prepaid units, with delivery split between January and February.- A three-year, 9% note due on October 1 of the prior year.- Common stock value is $2 per share; treasury stock from reacquiring 500 shares at $8 each.** ### Text Transcription for Educational Website#### Journal Entry Instructions and Transactions Summary1. **Dividend Distribution** - On January 10, OPC distributes a $0.50 cash dividend declared on January 4. The company's stock price is currently $5 per share.2. **Inventory Purchase** - OPC purchases on account and receives 70 units of inventory on January 11 for $3,920.3. **Equipment Sale** - Equipment purchased last year for $45,400 is sold on January 15 for $46,800 cash. Record depreciation for the first half of January prior to recording the equipment disposal.4. **Payroll Accruals** - Payroll for January 1-15 is recorded and paid on January 16. Be sure to accrue unemployment taxes and the employer’s matching share of FICA taxes.5. **Interest Payment** - Having sold the equipment, OPC pays off the note payable in full on January 17. The amount paid is $24,330, which includes interest accrued in December and an additional $97 interest through January 17.6. **Inventory On Consignment** - On January 27, OPC records sales of 30 units of inventory on account. Sales tax is charged but not yet collected or remitted.7. **Inventory Delivery** - A portion of the advance order from December (25 units) is delivered on January 29. No sales tax is collected on this transaction because OPC will deliver it to a U.S. governmental organization that is exempt from sales tax.8. **Bonds Issuance** - To obtain funds for purchasing new equipment, OPC issued bonds on January 30 with a total face value of $107,000, stated interest rate of 5 percent, annual compounding, and six-year maturity date. OPC received $96,800 from the bond issuance, which implies a market interest rate of 7 percent.9. **Depreciation Record** - On January 31, OPC records units-of-production depreciation on the vehicle (truck), which was driven 2,000 miles this month.10. **Accounts Receivable Adjustment** - OPC estimates that 2% of the ending accounts receivable balance will be uncollectible. Adjust the applicable accounts on January 31, using the allowance method.11. **Rent Adjustment** - On January 31,

Journal Entry It is important to enter the required journal entries into the debit and credit of transaction which are incurred in the business as well. Debit all expenses related transaction and credit all income related transaction as well.Required Journal Entries Journal Entry Event Date Particulars Debit ($) Credit ($) A Jan-01 Salaries & Wages Payable 1600 To Cash 1600 (Being salaries and wages payable amount paid on 01/01) B Jan-02 Truck 10000 To Cash 10000 (Being purchase of Truck on 02/01) C Jan-03 FICA Payable 600 Withheld Income tax payable 500 To Cash 1100 (Being tax payables are paid on 03/01) D Jan-04 Dividend - ($18200 / 2) (9100-500) (8600*0.50) 4300 To Dividend Payable 4300 (Being declare dividend on 04/01) E Jan-05 Allowance for Doubtful Debt 1035 To Accounts Receivable 1035 (Being written off doubtful amount) F Jan-06 Accounts Receivable 27825 To Sales (175*150) 26250 To Sales Tax Payable (26250*6%) 1575 (Being credit sales incurred) Cost of goods sold (175*68) 11900 To Inventory 11900 (Being cost of sales made) G Jan-07 Sales Tax Payable 500 To Cash 500 (Being paid collected sales tax) H Jan-08 Cash 2400 To Treasury Stock 2400 (Being issue of treasury stock purchased) I Jan-09 Cash 18021 To Accounts Receivable 18021 (Being collection from sales on 09/01) J Jan-10 Dividend payable 4300 To Cash 4300 (Being paid dividend declared on 04/01 on 10/01) K Jan-11 Inventories (70*56) 3920 To Accounts Payable (Being purchase of inventory) L Jan-15 Depreciation Cost ($45400-$1000)/5 - ($8880*15/365) 365 To Accumulated Depreciation Cost 365 (Being charges depreciation for 15 days) L Jan-15 Cash 46800 Accumulated Depreciation ($4440 + 365) 4805 To Gain on Disposal of Equipment 6205 To Equipment 45400 (Being sale of equipment) M Jan-16 Salaries & Wages Expenses 2000 To Withhold Income tax Payable 250 To FICA Payable 150 To Cash 1600 (Being paid half month salary to employees) M Jan-16 Payroll Tax Expenses 200 To FICA Payable 150 To Unemployment Tax Payable 50 (Being payroll tax entered) N Jan-17 Interest Expenses 97 Notes Payable 533 Notes Payable 23700 To Cash 24330 (Being settle the notes payable) O Jan-27 Accounts Receivable 4770 To Sales (30 * 150) 4500 To Sales Tax Payable 270 (Being record of sales) Jan-27 Cost of goods sold (30*56) 1680 To Inventory 1680 (Being cost of sales made) P Jan-29 Deferred Revenue (25*150) 3750 To Sales 3750 (Being sale portion Delived with sales tax exemption) Jan-29 Cost of goods sold (25*56) 1400 To Inventory 1400 (Being cost of sales made) Q Jan-30 Cash 96800 Discount on Bond payable 10200 To Bond Payable 107000 (Being issue of bond for the equipment purchases) R Jan-31 Depreciation Cost (10000/50000*2000) 400 To Accumulated Depreciation Cost 400 (Being provided depreciation cost) S Jan-31 Bad Debt Expenses (22874*2%) 457.48 To Allowance for Doubtful Account 457.48 (Being record of bad debt expenses) T Jan-31 Rent Expenses 1940 To Prepaid Rent 1940 (Being expires rent) U Jan-31 Salaries Expenses 2000 To Withhold Income tax Payable 250 To FICA Payable 150 To Salaries and Wages Payable 1600 (Being payable on salaries month end) Jan-31 Payroll Tax Expenses 200 To FICA Payable 150 To Unemployment Tax Payable 50 (Being made for unemployment taxes) V Jan-31 Income tax expenses 5740 To Income tax Payable 5740 (Being tax payable estimates)

Business

Accounting

January Transactions a. On 1/01, OPC paid employees' salaries and wages that were previously accrued on December 31. b. A truck is purchased on 1/02 for $10,000 cash. It is estimated this vehicle will be used for 50,000 miles, after whic will have no residual value. c Payroll withholdings and employer contributions for December are remitted on 1/03. d. OPC declares a $0.50 cash dividend on each share of common stock on 1/04, to be paid on 1/10. e. A $1,035 customer account is written off as uncollectible on 1/05. f On 1/06, recorded sales of 175 units of inventory on account. Sales tax is charged but not yet collected or remitted the state. g. Sales taxes of $500 that had been collected and recorded in December are paid to the state on 1/07. h. On 1/08, OPC issued 300 shares of treasury stock for $2.400.

January Transactions a. On 1/01, OPC paid employees' salaries and wages that were previously accrued on December 31. b. A truck is purchased on 1/02 for $10,000 cash. It is estimated this vehicle will be used for 50,000 miles, after whic will have no residual value. c Payroll withholdings and employer contributions for December are remitted on 1/03. d. OPC declares a $0.50 cash dividend on each share of common stock on 1/04, to be paid on 1/10. e. A $1,035 customer account is written off as uncollectible on 1/05. f On 1/06, recorded sales of 175 units of inventory on account. Sales tax is charged but not yet collected or remitted the state. g. Sales taxes of $500 that had been collected and recorded in December are paid to the state on 1/07. h. On 1/08, OPC issued 300 shares of treasury stock for $2.400.

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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