Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any. Notes were not issued for the purchase of inventory.

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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Assets
Cash
FORTEN COMPANY
Comparative Balance Sheets
December 31
Current Year
$ 49,800
65,810
275,656
Prior Year
$ 73,500
50,625
251,800
Accounts receivable
Inventory
Prepaid expenses
Total current assets
Equipment
Accumulated depreciation-Equipment
Total assets
Liabilities and Equity
Accounts payable
Short-term notes payable
Total current liabilities
Long-term notes payable
Total liabilities
Equity
Common stock, $5 par value
Paid-in capital in excess of par, common stock
Retained earnings
Total liabilities and equity
1,250
392,516
157,500
1,875
377,800
108,000
(46,000)
(36,625)
$ 513,391
$ 53,141
10,000
63,141
$ 439,800
$ 114,675
6,000
120,675
65,000
48,750
128,141
169,425
162,750
150,250
120,125
,391
$ 439,800
37,500
185,000
$ 513,5
FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Sales
Cost of goods sold
Gross profit
Operating expenses
Depreciation expense
Other expenses
Other gains (losses)
Loss on sale of equipment
Income before taxes
Income taxes expense
Net income
$ 582,500
285,000
297,500
$ 20,750
132,400
153,158
(5,125)
139,225
24,250
$114,975
Additional Information on Current Year Transactions
a. The loss on the cash sale of equipment was $5,125 (details in b)
b. Sold equipment costing $46,875, with accumulated depreciation of $30.125, for $11.625 cash.
c. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance.
d. Borrowed $4,000 cash by signing a short-term note payable
e. Paid $50,125 cash to reduce the long-term notes payable.
f. Issued 2,500 shares of common stock for $20 cash per share
g. Declared and paid cash dividends of $50,100
Journal entry worksheet
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Reconstruct the journal entry for cash payments for inventory, incorporating
the change in the related balance sheet account(s), if any. Notes were not
issued for the purchase of inventory.
Note: Enter debits before credits.
Date
December
31
Account Title
Debit
Credit
View general journal
Record entry
Clear entry
Transcribed Image Text:Assets Cash FORTEN COMPANY Comparative Balance Sheets December 31 Current Year $ 49,800 65,810 275,656 Prior Year $ 73,500 50,625 251,800 Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 1,250 392,516 157,500 1,875 377,800 108,000 (46,000) (36,625) $ 513,391 $ 53,141 10,000 63,141 $ 439,800 $ 114,675 6,000 120,675 65,000 48,750 128,141 169,425 162,750 150,250 120,125 ,391 $ 439,800 37,500 185,000 $ 513,5 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 582,500 285,000 297,500 $ 20,750 132,400 153,158 (5,125) 139,225 24,250 $114,975 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $5,125 (details in b) b. Sold equipment costing $46,875, with accumulated depreciation of $30.125, for $11.625 cash. c. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,000 cash by signing a short-term note payable e. Paid $50,125 cash to reduce the long-term notes payable. f. Issued 2,500 shares of common stock for $20 cash per share g. Declared and paid cash dividends of $50,100 Journal entry worksheet < 1 2 3 4 5 6 7 8 14 > Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any. Notes were not issued for the purchase of inventory. Note: Enter debits before credits. Date December 31 Account Title Debit Credit View general journal Record entry Clear entry
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