Question

Mason Automotive is an automotive parts company that sells car parts and provides car service to...

Mason Automotive is an automotive parts company that sells car parts and provides car service to customers. This is Mason's first year of operations and they have hired you as their CPA to prepare the income statement and balance sheet for their company. As such, January 1st , 2018 was the first day that Mason was in business. For the month of January, record all the necessary journal entries for transactions that occurred during the month. In addition, please prepare all necessary adjusting journal entries as of the end of the month.

From the information below, please fill out the "journal entries tab" for all the necessary journal entries. Furthermore, please complete the "T-Accounts" tab for the individual accounts so that the trial balance tab can be updated (automatically). I prepared the first journal entry for you in the journal entries tab and T-Accounts tab. Ensure you label the entries similar to how I have shown in Entry #1.

Once all entries are recored and the T-Accounts tab is updated, please prepare the financial statements (income statement and balance sheet) for the month of January.

Journal Entry #1
Mason Automotive sells 10,000,000 shares at $5 par for $30 on January 1st, 2018.
Journal Entry #2
Ed Mason, the CEO, hires 3,000 employees, whom will receive a combined salary of $12 Million on a monthly basis. The employees started on January 1st and will be paid for the month of January on February 5th. Employee's withholdings are as follows: 10% for federal income taxes 5% for state income taxes and 7% for FICA. Record the necessary entry as of January 1st, 2018.
Journal Entry #3
Mason Automotive issues a bond payable on January 1st, 2018 with a face value of $200 Million at 102. The bond will have a useful life of 5 years and interest is paid out monthly based on a rate of 5% APR. Record the necessary journal entry as of January 1st 2018.

(Note: Assume straight line amortization for the bond discount/premium).
Journal Entry #4
Mason Automotive purchased $80 Million dollars worth of inventory on account on January 2nd, 2018. Mason notes that it will use a perpetual inventory system to track inventory.
Journal Entry #5
Mason Automotive purchases fixed assets of $120 Million that will have a useful life of 10 years and no salvage value on January 2, 2018. $20 million was paid with cash with the remaining balance on account. These assets are depreciated using the straight-line method.
Journal Entry #6
On January 2nd, Mason Automotive shipped an order to Corby Panther Company. The shipping terms were FOB shipping point and the value of the order was $50 Million and the inventory cost was $20 Million. Assume that this sale was made on account.
Journal Entry #7
On January 3rd, Mason Automotive receives $75 Million advance payment from a customer, Michael Scott Paper Company, to manufacture 7,500 cars.
Journal Entry #8
Mason Automotive buys a patent from Apple for $24 Million on January 3rd, 2018. The patent has a legal life of 20 years, but a useful life of 10 years. Record the necessary entry as of January 3rd, 2018. Assume the patent was purchased using cash.
Journal Entry #9
Mason Automotive purchased $2 Million dollars worth of supplies January 4th, 2018. $1.5 Million was paid with cash with the remaining balance on account.
Journal Entry #10
Mason Automotive pre-pays for Rent Expense for the next year of $12 Million and Insurance Expense of $2.4 Million on January 4th, 2018
Journal Entry #11
On January 20th, Mason Automotive decides to purchase 2,000,000 shares of Treasury stock at $25 per share.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The intangible assets section of Sappelt Company at December 31, 2017, is presented below. Patents ($90,000...
The intangible assets section of Sappelt Company at December 31, 2017, is presented below. Patents ($90,000 cost less $9,000 amortization)                 $81,000 Franchises ($35,000 cost less $14,000 amortization)                         21,000     Total                  $102,000 The patent was acquired in January 2017 and has a useful life of 10 years. The franchise was acquired in January 2014 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2018. Jan. 2                     Paid $18,000 legal costs to...
7. [The following information applies to the questions displayed below.] On January 1, 2018, Weaver Corporation...
7. [The following information applies to the questions displayed below.] On January 1, 2018, Weaver Corporation purchased a patent for $270,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2020, the company incurred legal fees of $90,000 in successfully defending a patent infringement suit. The successful defense did not change the company’s estimate of useful life. Weaver Corporation’s year-end is December 31. 1. Record the...
7... On January 1, 2018, Weaver Corporation purchased a patent for $270,000. The remaining legal life...
7... On January 1, 2018, Weaver Corporation purchased a patent for $270,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2020, the company incurred legal fees of $90,000 in successfully defending a patent infringement suit. The successful defense did not change the company’s estimate of useful life. Weaver Corporation’s year-end is December 31. Required: 1. Record the purchase in 2018; amortization in 2018; amortization in...
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts...
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash $ 101,200 Accounts receivable 34,000 Inventory 152,000 Land 67,300 Buildings 120,000 Allowance for uncollectible accounts $ 1,800 Accumulated depreciation 9,600 Accounts payable 17,700 Bonds payable 120,000 Discount on bonds payable 30,000 Common stock 200,000 Retained earnings 155,400 Totals $ 504,500 $ 504,500 During January 2021, the following transactions occurred: January 1 Borrowed $100,000 from Captive Credit Corporation. The installment note bears...
On January 1, 2000 Freddie Company purchased 100% of the voting stock of Bob Company at...
On January 1, 2000 Freddie Company purchased 100% of the voting stock of Bob Company at book value when the book value of Bob's assets equaled their fair market value Freddie accounts for its investment in Bob using the initial value (cost method) and Bob doesn't pay any dividends On October 1st 2018, Freddie Company sold inventory to BOB Company for $1,000,000. Freddie had purchased the merchandise for $700,000. Bob paid cash for the merchandise and it hadn't sold any...
On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling...
On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2.00 per share on December 15, 2018, and Lavery reported net income of $160 million for the year ended December 31, 2018....
On January 4, 2018, Runyan Bakery paid $336 million for 10 million shares of Lavery Labeling...
On January 4, 2018, Runyan Bakery paid $336 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan received dividends of $2.50 per share on December 15, 2018, and Lavery reported net income of $210 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018,...
Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in...
Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2018, for $490 million. At the date of purchase, the book value of Vancouver's net assets was $820 million. The book values and fair values for all balance sheet items were the same except for inventory and plant facilities. The fair value...
On January 1, 2018, Weaver Corporation purchased a patent for $219,000. The remaining legal life is...
On January 1, 2018, Weaver Corporation purchased a patent for $219,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2020, the company incurred legal fees of $39,000 in successfully defending a patent infringement suit. The successful defense did not change the company’s estimate of useful life. Weaver Corporation’s year-end is December 31. Required: 1. Record the purchase in 2018; amortization in 2018; amortization in 2019;...
Marmidan Mold Shop Inc. designs and builds molds for the automotive and aircraft industries. The account...
Marmidan Mold Shop Inc. designs and builds molds for the automotive and aircraft industries. The account balances in the company’s general ledger on January 1, 2018 (first day of the annual fiscal year) were as follows (all account balances are in their normal debit or credit position): Cash                                                                    $     3,700 Accounts receivable                                                   5,900 Supplies inventory                                                    29,300 Land                                                                        168,500   Buildings                                                                 116,500 Accumulated depreciation, buildings                       37,500    Equipment                                                                 58,500 Accumulated depreciation, equipment                     18,000 Accounts payable                                                      25,200 Income tax payable                                                   16,600 Interest payable                                                           4,200...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT