Question

Pool Corporation, Inc., is the world's largest wholesale distributor of swimming pool supplies and equipment. It is a publicly traded corporation that trades on the NASDAQ exchange under the symbol POOL. It sells these products to swimming pool repair and service businesses, swimming pool builders, and retail swimming pool stores. The majority of these customers are small, family-owned businesses. Pool Corporation completed the following transactions during 2014.The annual accounting period ends December 31, 2014.

Sept 15 Purchased and paid for merchandise for resale at an invoice cost of $125,000; periodic inventory system.

Oct 1 Borrowed $900,000 from Southwest Bank for general use; signed an 11-month, 5 percent interestbearing note payable.

Oct 5 Received a $40,000 customer deposit from Joe Lipscomb for services to be performed in the future.

Oct 15 Performed $18,000 of the services paid for by Mr. Lipscomb.

Dec 12 Received electric bill for $12,000. Pool will pay it in early January.

Dec 31 Determined wages of $52,000 earned but not yet paid on December 31 (disregard payroll taxes).

Required:

Prepare journal entries for each of these transactions.

Prepare all adjusting entries required on December 31, 2014.

Answer 1

Journal entry :

Date	account and explanation	debit	credit
Sep 15	Purchase	125000
	Cash		125000
	(To record purchase)
Oct 1	Cash	900000
	Notes payable		900000
	(To record amount borrow)
Oct 5	Cash	40000
	Unearned service revenue		40000
	(To record unearned revenue)
Oct 15	Unearned service revenue	18000
	Service revenue		18000
	(To record service performed)

Adjusting entry :

Date	account and explanation	debit	credit
Dec 31	Utilities expense	12000
	Utilities payable		12000
	(To record utilities expense)
Dec 31	Wages expense	52000
	Wages payable		52000
	(To record accured wages)