Question

Record the following entries in general journal form for December, 2020: December 1: Recorded sales on account of $100,000, 2/10, net 30. Cost of inventory was 63,500. Company uses the net method for accounting for sales. December 2: Purchased Land for a future building site for $700,000, paying $200,000 down and signed a 5%, 90-day note for the balance. December 3: Bought back 1000 shares of stock for $17 per share. December 4: Purchased $40,000 worth of equipment, 5 year life, $5,000 salvage value, for cash. Equipment will be depreciated using the straight-line method of depreciation. December 5: Paid invoice of $31,500 to supplier. The invoice related to inventory purchase which had been previously recorded. December 6: Issued 5000 shares of restricted stock to its CFO. The stock has a fair value of $120,000. The service period related to this restricted stock is 3 years. Vesting occurs if the CFO stays with the company for 3 years. The par value of the stock is $1. December 8: Purchased inventory of $44,000 on account with terms 2/10 net 60. Cascade uses the net method for its purchases. December 9: Received payment related to sale on December 1. December 15: Recorded cash sales of $124,000, cost of merchandise inventory was $74,900. December 16: Issued 11,000 shares of common stock at $22.00 per share. December 17: Paid for 12/8 inventory purchase. December 18: Paid off short-term note from 12/1 trial balance plus interest of $3,582. December 19: Purchased $210,000 inventory on account with terms 3/15, net 30. Cascade uses the net method for its purchases. December 20: Recorded sales on account of $413,000, cost of merchandise inventory was $175,000. December 21: Paid $3,500 of utilities previously accrued. December 24: Sold 500 shares of Treasury Stock for $17.50 per share. December 26: Wrote off 4,500 in bad debt.

Answer 1

Prepare journal entries as follows:

Date	Account Titles & Explanation	Debit	Credit
Dec. 01	Accounts Receivable ($100,000 -$2,000)	$98,000
	Trade Discount ($100,000 × 2%)	$2,000
	Sales Revenue		$100,000
	(To record sales using net method)
Dec. 02	Land	$700,000
	Note payable		$500,000
	Cash		$200,000
	(To record purchase of Land)
Dec. 03	Treasury Stock (1000 × $17)	$17,000
	Cash		$17,000
	(To record shares bought back)
Dec. 04	Equipment	$40,000
	Cash		$40,000
	(To record purchase of Equipment)
Dec. 05	Accounts payable	$31,500
	Cash		$31,500
	(To record payment to supplier)
Dec. 06	Compensation Expense	$120,000
	Common stock, par $1 (5000 shares × $1)		$5,000
	Paid in capital in excess of par-Common stock		$115,000
	(To record common stock issued for 3 years restricted period)
Dec. 08	Inventory	$44,000
	Accounts payable		$43,120
	Trade discount ($44000 × 2%)		$880
	(To record purchase on account)
Dec. 09	Cash	$98,000
	Accounts Receivable		$98,000
	(To record receipt of payment related sales)
Dec. 15	Cash	$124,000
	Sales Revenue		$124,000
	(To record cash receipt from sales)
	COGS	$74,900
	Inventory		$74,900
	(To record cost of goods sold)
Dec. 16	Cash (11,000 × $22)	$242,000
	Common Stock (11,000 × $1)		$11,000
	Paid in capital in excess of par-Common stock (11,000 × $21)		$231,000
	(To record issuance of common stock)
Dec. 17	Accounts payable	$43,120
	Cash		$43,120
	(To record payments)
Dec. 18	Note payable-Short term	$71,640
	Interest Expense	$3,582
	Cash		$75,222
	(To record paid off short-term note with interest)
Dec. 19	Inventory	$210,000
	Accounts payable		$203,700
	Trade discount ($210,000 × 3%)		$6,300
	(To record purchase on account)
Dec. 20	Accounts Receivable	$413,000
	Sales Revenue		$413,000
	(To record sales on account)
	COGS	$175,000
	Inventory		$175,000
	(To record cost of goods sold)
Dec. 21	Utilities Expense	$3,500
	Cash		$3,500
	(To record utilities expense)
Dec. 24	Cash (500 × $17.50)	$8,750
	Treasury Stock (500 × $17)		$8,500
	Paid in capital in excess of par-Treasury stock (500 × $0.5)		$250
	(To record sale of treasury stock)
Dec. 26	Bad debts Expense	$4,500
	Accounts Receivable		$4,500
	(To record write off bad debts)