Stackhouse, Connelly, and Teagarden Enterprises (SCT Enterprises) was formed in
ID: 2422259 • Letter: S
Question
Stackhouse, Connelly, and Teagarden Enterprises (SCT Enterprises) was formed in December 2014. During the first month of operation, the following transactions occurred:
Dec 1 Issued common stock in exchange for $1,000,000 cash.
2 Purchased inventory on account for $80,000 (the perpetual inventory system is used).
3 Purchased $300,000 in equipment for cash.
4 Paid the company’s landlord $12,000 for rent for twelve months, debiting Prepaid Rent Expense.
10 Sold merchandise on account for $120,000. The cost of the merchandise was $75,000.
15 Borrowed $50,000 from a local bank and signed a note. Principal and interest of 10% to be repaid in one year.
20 Paid employees $15,000 wages for the first half of the month.
24 Paid $50,000 to suppliers for the merchandise purchased on December 2.
26 Collected $60,000 on account from customers.
28 Paid various utility bills of $1,500 for the month of December.
31 Paid $8,000 in insurance for the period January 1, 2015 to March 1, 2015.
31 Received payment of $5,000 for an order to be delivered January 20. The cost of the merchandise for the order will be $3,500.
Required (round all computations to the nearest whole dollar):
Prepare entries to record the above transactions.
Prepare an unadjusted trial balance.
Prepare adjusting entries for December, considering: Depreciation on the equipment is $36,000 per year. Rent expense for the month. Interest expense for the month. Wages for the second half of the month; assume employees earned wages evenly throughout the month.
Prepare an adjusted trial balance.
Prepare the four basic financial statements for the year ending December 31, 2014.
Prepare closing entries.
Prepare a post closing trial balance.
Explanation / Answer
Date Journal Debit Credit Dec-01 Cash 1,000,000 Common Stock 1,000,000 Dec-02 Inventory 80,000 Accounts Payable 80,000 Dec-03 Equipment 300,000 Cash 300,000 Dec-04 Rent 1,000 Prepaid Rent Expense 11,000 Cash 12,000 Dec-10 Accounts Receivables 120,000 Sales 120,000 Cost of Goods Sold 75,000 Inventory 75,000 Dec-15 Cash 50,000 Bank Loan 50,000 Dec-20 Salaries 15,000 Cash 15,000 Dec-24 Accounts Payable 50,000 Cash 50,000 Dec-26 Cash 60,000 Accounts Receivables 60,000 Dec-28 Utilities Expense 1,500 Cash 1,500 Dec-31 Prepaid insurance 8,000 cash 8,000 Dec-31 Cash 5,000 Unearned Revenue 5,000 Cost of Goods Sold 3,500 Inventory 3,500
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