AssetsCashFORTEN COMPANYComparative Balance SheetsDecember 31Current Year$ 49,80065,810275,656Prior Year$ 73,50050,625251,800Accounts receivableInventoryPrepaid expensesTotal current assetsEquipmentAccumulated depreciation-EquipmentTotal assetsLiabilities and EquityAccounts payableShort-term notes payableTotal current liabilitiesLong-term notes payableTotal liabilitiesEquityCommon stock, $5 par valuePaid-in capital in excess of par, common stockRetained earningsTotal liabilities and equity1,250392,516157,5001,875377,800108,000(46,000)(36,625)$ 513,391$ 53,14110,00063,141$ 439,800$ 114,6756,000120,67565,00048,750128,141169,425162,750150,250120,125,391$ 439,80037,500185,000$ 513,5FORTEN COMPANYIncome StatementFor Current Year Ended December 31SalesCost of goods soldGross profitOperating expensesDepreciation expenseOther expensesOther gains (losses)Loss on sale of equipmentIncome before taxesIncome taxes expenseNet income$ 582,500285,000297,500$ 20,750132,400153,158(5,125)139,22524,250$114,975Additional Information on Current Year Transactionsa. 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 payablee. Paid $50,125 cash to reduce the long-term notes payable.f. Issued 2,500 shares of common stock for $20 cash per shareg. Declared and paid cash dividends of $50,100Journal entry worksheet<1234567814>Reconstruct the journal entry for cash payments for inventory, incorporatingthe change in the related balance sheet account(s), if any. Notes were notissued for the purchase of inventory.Note: Enter debits before credits.DateDecember31Account TitleDebitCreditView general journalRecord entryClear entry

Name: AssetsCashFORTEN COMPANYComparative Balance SheetsDecember 31Current
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Description: AssetsCashFORTEN COMPANYComparative Balance SheetsDecember 31Current Year$ 49,80065,810275,656Prior Year$ 73,50050,625251,800Accounts receivableInventoryPrepaid expensesTotal current assetsEquipmentAccumulated depreciation-EquipmentTotal assetsLiabi

First of all we need to find out the amount of inventory purchases made during the year.Then we will…

Answered: Reconstruct the journal entry for cash…

Business

Accounting

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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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

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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2
3
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14
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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

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