I've decided to start a business that manufactures and sells comic books/graphicnovels. The business will use FIFO to manage inventory and makes adjusting entriesat the end of each month.a) To get started, on January 1st | take out a loan of $100,000 from the bank, with a10% interest rate. The principal will not have to be repaid until the end of the loan,in 4 years.b) Also on January 1st, I spend $44,000 cash on a printing press (a piece ofequipment that will produce the comic books).The equipment has a five year life and a $2,000 salvage value.c) On January 5th | issue 1,000 common shares of my company in exchange for$20,000 cash.d) On January 10th I purchase 100 comic books from an external supplier for $1each in cash.e) On January 12th I purchase another 50 of the same comic books from the samesupplier for $1.25 each on credit.f) On January 15th I sell 125 of the comic books that I had purchased. I sell them for$3 each on account.g) The company's Allowance for Doubtful Accounts is currently $10. On January31st, the company estimates that it will not collect 10% of its current accountsreceivable.Instructions1) Provide journal entries for all of the above transactions, where applicable.2) Provide any adjusting entries relating to the above transactions as at January31st.3) On February 1st, an annoyed customer walks into the business and repeatedlyhits the equipment with a wrench. The equipment will now only be able to generate$3,000 in profit in the future. Alternatively, the equipment could be sold for $4,000,but I would have to ship it, which would cost $700. Does this impact my accountingfor the equipment? If so, provide the journal entry.

1) Journal Entry Date Particular Debit Credit 1 Jan Cash a/c 100,000 To Bank loan…

novels. The business will use FIFO to manage inventory and makes ac at the end of each month. a) To get started, on January 1st I take out a loan of $100,000 from th 10% interest rate. The principal will not have to be repaid until the en in 4 years. b) Also on January 1st, I spend $44,000 cash on a printing press (a pie equipment that will produce the comic books). The equipment has a five year life and a $2,000 salvage value. c) On January 5th | issue 1,000 common shares of my company in exc $20,000 cash. d) On January 10th I purchase 100 comic books from an external supp

novels. The business will use FIFO to manage inventory and makes ac at the end of each month. a) To get started, on January 1st I take out a loan of $100,000 from th 10% interest rate. The principal will not have to be repaid until the en in 4 years. b) Also on January 1st, I spend $44,000 cash on a printing press (a pie equipment that will produce the comic books). The equipment has a five year life and a $2,000 salvage value. c) On January 5th | issue 1,000 common shares of my company in exc $20,000 cash. d) On January 10th I purchase 100 comic books from an external supp

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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