Sheridan Company started business on January 1, 2024. The following transactions occurred in 2024: 1. On January 1, the company issued 10,000 common shares for $250,000. 2. On January 2, the company borrowed $62,000 from the bank. 3. On January 3, the company purchased land and a building for a total of $200,000 cash. The land was recently appraised at a fair market value of $60,000. (Note: Because the building will be depreciated in the future and the land will not, these two assets should be recorded in separate accounts.) 4. Inventory costing $123,000 was purchased on account. 5. Sales to customers totalled $211,000. Of these, $175,000 were sales on account. 6. The cost of the inventory that was sold to customers in transaction 5 was $120,000. 7. Payments to suppliers on account totalled $112,000. 8. Collections from customers on account totalled $155,000. 9. Payments to employees for wages were $53,000. In addition, there was $2,000 of unpaid wages at year end. 10. The interest on the bank loan was recognized and paid. The interest rate on the loan was 6%. Adjusting entries: 11. The building was estimated to have a useful life of 30 years and a residual value of $20,000. The company uses the straight-line method of depreciation. 12. The company declared dividends of $9,000 on December 15, 2024, to be paid on January 15, 2025.
Sheridan Company started business on January 1, 2024. The following transactions occurred in 2024: 1. On January 1, the company issued 10,000 common shares for $250,000. 2. On January 2, the company borrowed $62,000 from the bank. 3. On January 3, the company purchased land and a building for a total of $200,000 cash. The land was recently appraised at a fair market value of $60,000. (Note: Because the building will be depreciated in the future and the land will not, these two assets should be recorded in separate accounts.) 4. Inventory costing $123,000 was purchased on account. 5. Sales to customers totalled $211,000. Of these, $175,000 were sales on account. 6. The cost of the inventory that was sold to customers in transaction 5 was $120,000. 7. Payments to suppliers on account totalled $112,000. 8. Collections from customers on account totalled $155,000. 9. Payments to employees for wages were $53,000. In addition, there was $2,000 of unpaid wages at year end. 10. The interest on the bank loan was recognized and paid. The interest rate on the loan was 6%. Adjusting entries: 11. The building was estimated to have a useful life of 30 years and a residual value of $20,000. The company uses the straight-line method of depreciation. 12. The company declared dividends of $9,000 on December 15, 2024, to be paid on January 15, 2025.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sheridan Company started business on January 1, 2024. The following transactions occurred in 2024:
1. On January 1, the company issued 10,000 common shares for $250,000.
2. On January 2, the company borrowed $62,000 from the bank.
3.
On January 3, the company purchased land and a building for a total of $200,000 cash. The land was recently appraised at
a fair market value of $60,000. (Note: Because the building will be depreciated in the future and the land will not, these
two assets should be recorded in separate accounts.)
4.
Inventory costing $123,000 was purchased on account.
5. Sales to customers totalled $211,000. Of these, $175,000 were sales on account.
6. The cost of the inventory that was sold to customers in transaction 5 was $120,000.
7. Payments to suppliers on account totalled $112,000.
8. Collections from customers on account totalled $155,000.
9. Payments to employees for wages were $53,000. In addition, there was $2,000 of unpaid wages at year end.
10. The interest on the bank loan was recognized and paid. The interest rate on the loan was 6%.
Adjusting entries:
11. The building was estimated to have a useful life of 30 years and a residual value of $20,000. The company uses the
straight-line method of depreciation.
12. The company declared dividends of $9,000 on December 15, 2024, to be paid on January 15, 2025.
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