Question

1. Prepare journal entries for the following transactions from Angled Pictures.

June 21. Customer LeShaun Rogers purchased 167 picture frames at a sales price of $28 per frame with her American credit card. The cost to Angled Pictures for the sale is $19 per frame. American credit card charges Angled Pictures a fee of 3% of the sale.

June 30. American remits payment to Angled Pictures, less any fees.

2. Jada Company had the following transactions during the year:

• Purchased a machine for $500,000 using a long-term note to finance it

• Paid $500 for ordinary repair

• Purchased a patent for $45,000 cash

• Paid $200,000 cash for addition to an existing building

• Paid $60,000 for monthly salaries

• Paid $250 for routine maintenance on equipment

• Paid $10,000 for major repairs

• Depreciation expense recorded for the year is $25,000

If all transactions were recorded properly, what is the amount of increase to the Property, Plant, and Equipment section of Jada’s balance sheet resulting from this year’s transactions? What amount did Jada report on the income statement for expenses for the year?

3. Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the asset’s life, and create the journal entry for year four.

1. Consider the following situations and determine (1) which type of liability should be recognized (specific account), and (2) how much should be recognized in the current period (year).
   1. A business sets up a line of credit with a supplier. The company purchases $10,000 worth of equipment on credit. Terms of purchase are 5/10, n/30.
   2. A customer purchases a watering hose for $25. The sales tax rate is 5%.
   3. Customers pay in advance for season tickets to a soccer game. There are fourteen customers, each paying $250 per season ticket. Each customer purchased two season tickets.
   4. A company issues 2,000 shares of its common stock with a price per share of $15.

Answer 1

Journal entries in the book of Angled Pictures

Date	Particulars	Debit($)	Credit($)
June 21	Bank account Dr To Sales account ( For being, Sale of 167 frames to customer Leshaun at $28 per frame and cash paid through his credit card)(167* 28	4,676	4,676
June 21	Bank charges Account. Dr To Bank account ( For being, bank charges for the receipt via credit card at 3% of sales = 3% * 4,676)	140.28	140.28
June 21	Selling expenses account. Dr To Cash account (For being, cost of $19 per frame incurred for selling the frames )	3,173	3,173