Lalit has decided to open up his own juice bar and incorporated his new business, JuiceHeads Inc. (JH), on July 1, 20x3. He invested $20,000 of his own funds and took back 100 common shares in return. He also obtained a 3-year bank loan for $50,000 on July 1st. The loan bears interest of 6%. The interest is due annually on June 30th. He has decided that December 31st will be the business’ year end. The following information is also available: 1. On July 1St, 20x3, JH entered into a 1-year lease for its retail location. It paid the first and last month rent on that day. Monthly rent is $2,000. 2. On July 3rd, 20x3, equipment was purchased for $10,000 with cash. It is expected to have a 5-year useful life and no salvage value. They plan to use straight-line depreciation. 3. On July 5th, 20x3, office supplies of $650 were purchased on account. At year end, there are $350 of office supplies still on hand. 4. On July 28th, 20x3, the insurance premium of $3,000 was paid with cash. The insurance covers the period August 1st 20x3 –July 31st 20x4. 5. Lalit offered an annual subscription to a "Juice a day" program. It went on sale August 1st and 50 people bought such memberships for $1,100 each on that day with cash. No other annual memberships were purchased in 20x3. 6. Sales for the period of August 1 - December 31, other than the memberships above, were $50,000 in cash, and $23,000 was paid for COGS during the same period. 7. On December 15th, 20x3, JH declared a dividend of $4,000. It has not yet been paid. Required – Record all necessary initial and adjusting journal entries for the accounting events described above.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Lalit has decided to open up his own juice bar and incorporated his new business, JuiceHeads Inc. (JH), on July 1, 20x3. He invested $20,000 of his own funds and took
back 100 common shares in return. He also obtained a 3-year bank loan for $50,000 on July 1st. The loan bears interest of 6%. The interest is due annually on June 30n.
He has decided that December 31st will be the business' year end.
The following information is also available:
1. On July 15t, 20x3, JH entered into a 1-year lease for its retail location. It paid the first and last month rent on that day. Monthly rent is $2,000.
2. On July 3rd, 20x3, equipment was purchased for $10,000 with cash. It is expected to have a 5-year useful life and no salvage value. They plan to use straight-line
depreciation.
3. On July 5n, 20x3, office supplies of $650 were purchased on account. At year end, there are $350 of office supplies still on hand.
4. On July 28tn, 20x3, the insurance premium of $3,000 was paid with cash. The insurance covers the period August 1st 20x3 –July 31st 20x4.
5. Lalit offered an annual subscription to a "Juice a day" program. It went on sale August 1st and 50 people bought such memberships for $1,100 each on that day
with cash. No other annual memberships were purchased in 20x3.
6. Sales for the period of August 1 - December 31, other than the memberships above, were $50,000 in cash, and $23,000 was paid for COGS during the same
period.
7. On December 15th, 20x3, JH declared a dividend of $4,000. It has not yet been paid.
Required –
Record all necessary initial and adjusting journal entries for the accounting events described above.
Transcribed Image Text:Lalit has decided to open up his own juice bar and incorporated his new business, JuiceHeads Inc. (JH), on July 1, 20x3. He invested $20,000 of his own funds and took back 100 common shares in return. He also obtained a 3-year bank loan for $50,000 on July 1st. The loan bears interest of 6%. The interest is due annually on June 30n. He has decided that December 31st will be the business' year end. The following information is also available: 1. On July 15t, 20x3, JH entered into a 1-year lease for its retail location. It paid the first and last month rent on that day. Monthly rent is $2,000. 2. On July 3rd, 20x3, equipment was purchased for $10,000 with cash. It is expected to have a 5-year useful life and no salvage value. They plan to use straight-line depreciation. 3. On July 5n, 20x3, office supplies of $650 were purchased on account. At year end, there are $350 of office supplies still on hand. 4. On July 28tn, 20x3, the insurance premium of $3,000 was paid with cash. The insurance covers the period August 1st 20x3 –July 31st 20x4. 5. Lalit offered an annual subscription to a "Juice a day" program. It went on sale August 1st and 50 people bought such memberships for $1,100 each on that day with cash. No other annual memberships were purchased in 20x3. 6. Sales for the period of August 1 - December 31, other than the memberships above, were $50,000 in cash, and $23,000 was paid for COGS during the same period. 7. On December 15th, 20x3, JH declared a dividend of $4,000. It has not yet been paid. Required – Record all necessary initial and adjusting journal entries for the accounting events described above.
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