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Assets Cash                                        &nb

Assets

Cash                                                                                           $500,000

Accounts Receivable                                                                  700,000                             

Inventory                                                                                     300,000

Property, Plant & Equipment                          900,000

Accumulated Depreciation                          (100,000)              800,000

Total Assets                                                                            $2,300,000

Liabilities & Equity

Accounts Payable                                                                      $300,000

Notes Payable                                                                           1,000,000

Common Stock                                                                            500,000

Retained Earnings                                                                       500,000

Total Liabilities & Equity                                                      $2,300,000

Journal Entries for January 2013

Transaction 1: Services Provided for Cash

Description: Receives $155,000 cash from customers for programming services it has provided.

Journal Entry:                                                                                                          Dr.                              Cr.

Cash                                                                                                                      155,000

            Sales                                                                                                                                              155,000  

Transaction 2: Receipt of Cash on Account

Description: Receives $28,000 in cash from customers who had been billed for services.

Journal Entry:                                                                                                           Dr.                              Cr.

Cash                                                                                                                          28,000                           

          Accounts Receivable                                                                                                                            28,000
          

Transaction 3: Cost Flow Assumption: LIFO

Description: Recorded $45,000 in cost of goods sold under the LIFO cost flow assumption.

Journal Entry:                                                                                                         Dr.                               Cr.

Cost of Goods Sold                                                                                                   45,000

                  Inventory                                                                                                                                    45,000

Transaction 4: Recording Depreciation Expense

Description: Recorded depreciation expense under the straight-line method.

Journal Entry:                                                                                                          Dr.                               Cr.

Depreciation Expense                                                                                               9,000

                  Accumulated Depreciation                                                                                                           9,000

Transaction 5: Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was equal to the book value.

Journal Entry:                                                                                                    Dr.                                    Cr.

Cash                                                                                                                      3,000

Accumulated Depreciation                                                                                  16,000

                  Equipment                                                                                                                                    19,000

Transaction 6: Gain on Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was $2,000 more than the book value resulting in a gain.

Journal Entry:                                                                                                        Dr.                                   Cr.

Cash                                                                                                                      5,000

Accumulated Depreciation                                                                                  16,000

                  Gain                                                                                                                                               2,000

                  Equipment                                                                                                                                      19,000

Transaction 7: Loss on Sale of Plant Asset

Description: Sale of plant asset for cash. The cash received was $500 less than the book value resulting in a loss.

Journal Entry:                                                                                                        Dr.                                   Cr.

Cash                                                                                                                         2,500

Loss                                                                                                                            500

Accumulated Depreciation                                                                                   13,000

                  Equipment                                                                                                                                     16,000

Transaction 8: Note Given to Borrow from Bank

Description: Borrowed $2,000 cash with a 60-day, 12%, $2,000 note.

Journal Entry:                                                                                                        Dr.                                    Cr.

Cash                                                                                                                      2,000

                  Notes Payable                                                                                                                                  2,000

Transaction 9: Payment of Note

Description: Paid the principal and interest on the note in Transaction 8.

Journal Entry:                                                                                                        Dr.                                      Cr.

Notes Payable                                                                                                      2,000

Interest Expense                                                                                                        40

                  Cash                                                                                                                                                2,040

Transaction 10: Bond Issue

Description: Issued a $100,000 Par Value Bond at a Discount

Journal Entry:                                                                                                         Dr.                                     Cr.

Cash                                                                                                                     96,454

                  Bonds Payable                                                                                                                                   96,454

Transaction 11: Effective Interest Amortization

Description: Recorded bond interest expense under the effective interest method.

Journal Entry:                                                                                                           Dr.                                      Cr.

Bond Interest Expense                                                                                           4,823

                  Bonds Payable                                                                                                                                     823

                  Cash                                                                                                                                                    4,000

Transaction 12: Issuing Par Value Stock at a Premium

Description: Issued common stock and received cash of $50,000 in excess of par value.

Journal Entry:                                                                                                            Dr.                         Cr.

Cash                                                                                                                       350,000

                  Common Stock , $10 Par Value                                                                                           300,000

                  Paid-in Capital in Excess of Par Value, Common Stock                                                       50,000

Transaction 13: Dividend

Description: The corporation pays a dividend of $3,800 in cash to the stockholders of Softbyte.

Journal Entry:                                                                                                             Dr.                            Cr.

Dividends                                                                                                                    3,800

            Cash                                                                                                                                                  3,800

5. What is the amount of total assets as of January 31, 2013?

A.   $2,462,995

B.   $2,655,235

C.   $2,841,114

D.   $2,935,755

6. What is the ending retained earnings balance?

A.   $575,713

B.   $581,972

C.   $593,837

D.   $615,245

7. What is the amount of net income?

A.   $90,468

B.   $92,743

C.   $97,637

D.   $99,645

8. What is the amount of total expenses and losses?

A.   $55,455

B.   $57,924

C.   $59,363

D.   $61,455

Business   Accounting   
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Homework Answers

Answer #1

5. Option "C" is the answer.

Amount of total assets = cash + accounts receivable + inventory + property - accumulated depreciation = 1132114 + 672000 + 255000 + 846000 - 64000 = 2841114

6. Option "C" is the answer.

Ending balance of Retained earnings = opening balance + profit during the month = 500000 + (155000 - 45000 - 9000 + 2000 - 500 - 40 - 4823 - 3800) = 593837

7. Option "C" is the answer.

Net income = profit before dividend = 155000 - 45000 - 9000 + 2000 - 500 - 40 - 4823 = 97637

8. Option "C" is the answer.

Total expenses and losses = 45000 + 9000 + 500 + 40 + 4823 = 59363.

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