Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 4.6P
- January 18: The owners invested $200,000 (the par value of the stock) into the business and acquired 40,000 shares of common stock in return.
- February 1: Tides bought factory equipment in the amount of $45,000. The company took out a long-term note from the bank to finance the purchase.
- February 28: The company paid cash for rent to cover the 12-month period from March 1, 2018, through February 29. 2019, in the amount of $27,000.
- March 1: Tides purchased supplies in the amount of $28,000 on account.
- March 22: Tides recorded sales revenue in the amount of $120,000. Half of this amount was received in cash and half was paid on account. Ignore cost of goods sold.
- May 1: Tides received cash payments to pay off all the customer accounts.
- May 29: The company paid wages of $34,000 in cash.
- July 12: Tides recorded sales revenue in the amount of $180,000, all of which was paid in cash. Ignore cost of goods sold.
- July 31: Tides paid $3,200 cash for interest on the note taken out on February 1.
- August 8: Tides paid off the balance owed to a supplier for the purchase made on March 1.
- September 1: Tides paid $6,000 cash for utilities.
- October 14: Tides paid wages of $24,000 in cash.
$100,000 was received in cash; the remainder of this balance was sold on account Ignore cost of goods sold.
- December 31: Tides declared and paid a $25,000 dividend.
The chart of accounts used by Tides Tea Company is as follows:
Chart of Accounts | ||
Group | Account # | Account Title |
100: Assets | 101 | Cash |
102 | ||
103 | Supplies | |
104 | Prepaid Rent | |
110 | Equipment | |
112 | Accumulated Depreciation—Equipment | |
200: Liabilities | 201 | Accounts Payable |
203 | Wages Payable | |
210 | Interest Payable | |
220 | Notes Payable | |
300: Equity | 301 | Common Stock |
310 | ||
320 | Dividends | |
400: Revenues | 401 | Sales Revenue |
500: Expenses | 501 | Wage Expense |
502 | Utilities Expense | |
503 | Rent Expense | |
504 | Administrative Expense | |
505 | Insurance Expense | |
506 | Supplies Expense | |
510 | Depreciation Expense—Equipment | |
600: Other | 601 | Income Summary |
Required
- a. Journalize the transactions for the year Omit explanations.
- b. Post the journal entries to the general ledger.
- c. Prepare an unadjusted trial balance as of December 31.
Expert Solution & Answer
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Intermediate Accounting (2nd Edition)
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