1. Dec. 1, Purchased 200 shares of Chevron Corp. common stock for $93.50 per sha
ID: 2480186 • Letter: 1
Question
1. Dec. 1, Purchased 200 shares of Chevron Corp. common stock for $93.50 per share to be held as a short-term investment. In addition to the purchase price $40 in brokerage fees were paid to acquire the stock. Check #101 was issued for payment [enter ck #101 under “Memo”] [note: for the $40, remember that “any cost incurred to acquire an asset must be recorded as a cost of that asset” (e.g. freight-in on purchased inventory is debited to the inventory account). Unclick the “adjusting entry” box for all JEs you are recording.
2. Dec. 1, purchased a computer from Computer World for $2,000. Sales tax of 7.5% must also be paid. Payment was made by signing a 2-year note which requires interest at an annual rate of 8% to be paid every quarter. The computer is expected to last 3 years after which time it is expected to be sold for $350. It will be depreciated using the double declining method (due to the rapid obsolescence of computer hardware). 3
. Dec. 1, paid $1,680 to National Insurance Company for a one-year insurance policy which “runs” from Dec. 1, 2015 – November 30, 2016. Check #102 was issued for payment.
4. Dec. 1, paid $3,600 to JB Commercial Properties for two months of building rent, the months of December 2015 and January 2016. Check #103 was issued for payment. Charge the December rent to “Rent Expense” since that amount will be used up in the current month.
5. Dec. 2, purchased $800 of supplies on credit under terms n/30 from Office Supplies Inc. Since these items are not going to be resold by Siesta Company (i.e. they are not inventory), sales tax at 7.5% must also be paid. Office Supplies Inc. invoice #5450 was received at time of purchase (use in your description) and enter “Office Supplies Inc. under the “name” column and then add as a vendor when prompted.
6. Dec. 19, received a quarterly dividend check for $180 from Chevron Corporation.
7. Dec. 27, pay Mattress World invoice #MWI233 for $8,000 with check #105. Note: Do not make a JE entry for this transaction. Rather complete the steps under item #10 on p. 16 of Part A [i.e. click on “Vendors”, “pay bills” and select the Mattress World invoice] and the system will automatically make the JE for you. Realize what is occurring here => under item #10 in Part A the invoice from Mattress World was received and entered into A/P but because terms were n/30 the invoice was not paid at that time, but now 30 days has almost passed.
8. Dec. 28, it was determined that the “packaging machine” was not needed for the business and thus it was sold for $8,000. Two entries are needed to record the disposal of fixed assets, one to catch-up the depreciation to the date of disposal (thus one month of depreciation needs to be recorded) and the second to record the disposal. Use the information given under step #1 on p. 5 from the Part A handout (related to the depreciation method to use, etc.) to help you record the two entries (use a reference of #12-8a and #12-8b when recording the two entries).
9. Dec. 28, sold 100 shares of the 200 shares of Chevron Corporation stock held as a short-term investment for $104.25 per share. $40 in brokerage fees were incurred to sell the stock. [hint: the $40 is a reduction in the “proceeds from sale” (i.e. reduces the amount of cash received); also, if ½ of the shares purchased were sold ½ of the cost recorded under #1 above needs to be removed from the books)
10. Dec. 29, the BOD of Siesta Company declared and paid a $2,200 dividend to stockholders. Check #106 was issued to the clearing house which tracks stock ownership and makes the dividend payments for Siesta Company.
11. Dec. 30, Jane Doe, a customer, walked into the store and purchased a comfort bed set (item #ComB1) for $1,800 and was also charged sales tax at 7.5%. Jane Doe wrote out her check #170 for $1,935 for payment in full.
12. Dec. 30, Remitted (made) payment to Office Supplies Inc. invoice #5433 for the purchase of supplies made on credit on December 2 (transaction #5 above) by issuing check #107 for $860. You can either make a JE here [when entering the A/P side of a JE under “Name” you will need to pull down “Office Supplies Inc.”], or by issuing a check(pay bills) where the system automatically makes the entry for you [on the home page flow-chart click on “pay bills”]
13. Dec. 30, the two employees are to be paid in cash for work performed during the month of December. Complete the following table to determine the amounts to be recorded in the two entries which are required =>
(1). The “employee entry” related to the gross and net pay [record two entries here, one for each employee’s check, use 12-13(a) and 12-13(b) as reference numbers for the JEs and check #108 for Joe McCoy and check #109 or Real McCoy], and
(2) the “employer entry” needed for the employer payroll taxes (FICA and Unemployment Taxes) [record this entry as #12-13©].
All taxes will be paid on January 2, 2016.
Use the “Payroll Taxes Payable” account for all taxes to be remitted to the governments on January 2, 2016,
Explanation / Answer
JEs for Question 1 :-
Debit Credit Common Stock A/c $ 18,700 Brokerage $40 Bank A/c (Check 101) $ 18,740Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.