General Journal Entries One Product Corp. (OPC) incorporated at the beginning of
ID: 2535953 • Letter: G
Question
General Journal Entries
One Product Corp. (OPC) incorporated at the beginning of last year. The balances on its postclosing
trial balance prepared on December 31, at the end of its first year of operations, were:
The following information is relevant to the first month of operations in the following year:
OPC sell its inventory at $150 per unit, plus sales tax of 6%. OPC’s January 1 inventory balance consists of 180 units at a total cost of $12,060. OPC’s policy is to use the FIFO method, recorded using a perpetual inventory system.
The equipment was purchased on July 1 of last year. It has a residual value of $1,000 and an expected life of five years. It is being depreciated using the straight-line method.
Employee wages are $4,000 per month. Employees are paid on the 16th for the first half of the month and on the first day of the following month for the second half of each month. Withholdings each pay period include $250 of income taxes and $150 of FICA taxes. These withholdings and the employer’s matching contribution are paid monthly on the second day of the following month. In addition, unemployment taxes of $50 are accrued each pay period, and will be paid on March 31.
Unearned Revenue is for 30 units ordered and paid for in advance by two customers in late December. One order of 25 units is to be filled in January, and the other will be filled in February.
January Transactions
On 1/01, OPC paid employees’ salaries and wages that were previously accrued on December 31.
A truck is purchased on 1/02 for $10,000 cash. It is estimated this vehicle will be used for 50,000 miles, after which it will have no residual value.
Payroll withholdings and employer contributions for December are remitted on 1/03.
OPC declares a $0.50 cash dividend on each share of common stock on 1/04, to be paid on 1/10.
A $950 customer account is written off as uncollectible on 1/05.
On 1/10, OPC distributes the $0.50 cash dividend declared on January 4. The company’s stock price is currently $5 per share.
The equipment purchased last year for $25,000 is sold on 1/15 for $23,000 cash. Record depreciation for the first half of January prior to recording the equipment disposal.
Payroll for January 1-15 is recorded and paid on 1/16. Be sure to accrue unemployment taxes and the employer’s matching share of FICA taxes.
Having sold the equipment, OPC pays off the note payable in full on 1/17. The amount paid is $22,585 which includes interest accrued in December and an additional $90 interest through January 17.
On 1/27, OPC records sales of 30 units of inventory on account. Sales tax is charged but not yet collected or remitted.
A portion of the advance order from December (25 units) is delivered on 1/29. No sales tax is collected on this transaction because the customer is a United States governmental organization that is exempt from sales tax.
To obtain funds for purchasing new equipment, OPC issued bonds on 1/30 with a total face value of $90,000, stated interest rate of 5 percent, annual compounding, and six-year maturity date. OPC received $81,420 from the bond issuance, which implies a market interest rate of 7 percent.
OPC estimates that 2% of the ending accounts receivable balance will be uncollectible. Adjust the applicable accounts on 1/31, using the allowance method.
Accrue OPC’s corporate income taxes on 1/31, estimated to be $3,750.
Prepare all January journal entries and adjusting entries for items 1–19. Review the 'General Ledger' and the adjusted 'Trial Balance' Tabs to see the effect of the transactions on the account balances.
1
On 1/01, OPC paid employees’ salaries and wages that were previously accrued on December 31. Record the transaction.
2
A truck is purchased on 1/02 for $10,000 cash. It is estimated this vehicle will be used for 50,000 miles, after which it will have no residual value. Record the transaction.
3
Payroll withholdings and employer contributions for December are remitted on 1/03. Record the transaction.
4
OPC declares a $0.50 cash dividend on each share of common stock on 1/04, to be paid on 1/10. Record the transaction.
5
A $950 customer account is written off as uncollectible on 1/05. Record the transaction.
6
On 1/06, recorded sales of 175 units of inventory on account. Sales tax is charged but not yet collected or remitted to the state. Record the transaction.
7
On 1/06, recorded sales of 175 units of inventory on account. Sales tax is charged but not yet collected or remitted to the state. Record the transaction.
8
Sales taxes of $500 that had been collected and recorded in December are paid to the state on 1/07. Record the transaction.
9
On 1/08, OPC issued 300 shares of treasury stock for $2,400. Record the transaction.
10
Collections from customers on account, totaling $8,500, are recorded on 1/09. Record the transaction.
11
On 1/10, OPC distributes the $0.50 cash dividend declared on January 4. The company’s stock price is currently $5 per share. Record the transaction.
12
OPC purchases on account and receives 70 units of inventory on 1/11 for $4,410. Record the transaction.
13
The equipment purchased last year for $25,000 is sold on 1/15 for $23,000 cash. Record depreciation for the first half of January prior to recording the equipment disposal. Record the transaction.
14
The equipment purchased last year for $25,000 is sold on 1/15 for $23,000 cash. Record depreciation for the first half of January prior to recording the equipment disposal. Record the transaction.
15
Payroll for January 1-15 is recorded and paid on 1/16. Be sure to accrue unemployment taxes and the employer’s matching share of FICA taxes. Record the transaction.
16
Having sold the equipment, OPC pays off the note payable in full on 1/17. The amount paid is $22,585, which includes interest accrued in December and an additional $90 interest through January 17. Record the transaction.
17
On 1/27, OPC records sales of 30 units of inventory on account. Sales tax is charged but not yet collected or remitted. Record the transaction.
18
On 1/27, OPC records sales of 30 units of inventory on account. Sales tax is charged but not yet collected or remitted. Record the transaction.
19
A portion of the advance order from December (25 units) is delivered on 1/29. No sales tax is collected on this transaction because the customer is a United States governmental organization that is exempt from sales tax. Record the transaction.
20
A portion of the advance order from December (25 units) is delivered on 1/29. No sales tax is collected on this transaction because the customer is a United States governmental organization that is exempt from sales tax. Record the transaction.
21
To obtain funds for purchasing new equipment, OPC issued bonds on 1/30 with a total face value of $90,000, stated interest rate of 5 percent, annual compounding, and six-year maturity date. OPC received $81,420 from the bond issuance, which implies a market interest rate of 7 percent. Record the transaction.
22
On 1/31, OPC records units-of-production depreciation on the vehicle (truck), which was driven 1,900 miles this month. Record the transaction.
23
OPC estimates that 2% of the ending accounts receivable balance will be uncollectible. Adjust the applicable accounts on 1/31, using the allowance method. Record the transaction.
24
On 1/31, adjust for January rent expired. Record the transaction.
25
Accrue January 31 payroll on 1/31, which will be payable on February 1. Be sure to accrue unemployment taxes and the employer’s matching share of FICA taxes. Record the transaction.
26
Accrue OPC’s corporate income taxes on 1/31, estimated to be $3,750. Record the transaction.
One Product Corp. (OPC) incorporated at the beginning of last year. The balances on its postclosing
trial balance prepared on December 31, at the end of its first year of operations, were:
Explanation / Answer
As per Chegg policy, only first part of the question will be answered.
1. Payment of Salary:
01/01 Salaries and Wages Payable A/c Dr. 1600
To Cash A/c 1600
(Being salaries and wages due paid)
2.
01/02 Vehicle (Asset) A/c Dr. 10,000
To Cash 10,000
(Being vehicle purchased)
3.
01/03 FICA Payable A/c Dr. 600
Withheld Income Tax Payable Dr. 500
To Cash 1,100
( Being FICA and Withheld IT paid)
4.
01/04 Retained Earnings Dr 3,325 [(Common Stock $13,300 / par value of stock $2) * Dividend 0.5]
To Dividend payable 3,325
(Being dividend declared @0.5 per stock)
5.
01/05 Allowance for Doubtful accounts Dr. 885
Bad debts Dr. 65
To Accounts Receivable 950
(Being bad debts written off against provision and excess booked as loss)
6.
01/06 Accounts Receivable Dr. 27,825
To Sales 26,250 (175 units @150 per unit)
To Sales Tax Payable 1,575 (Sale $26,250 * Tax rate 6%)
(Being sales of 175 units on account)
7.
01/06 Accounts Receivable Dr. 27,825
To Sales 26,250 (175 units @150 per unit)
To Sales Tax Payable 1,575 (Sale $26,250 * Tax rate 6%)
(Being sales of 175 units on account)
8.
01/07 Sales Tax Payable Dr. 500
To Cash 500
(Being sales tax for December paid)
9.
01/08 Cash Dr. 2,400
To Common Stock 600 (300 shares at par value of $2)
To Additional Paid-In Capital, Common 1,800 (2400- 600)
(Being 300 shares issued)
10.
01/09 Cash Dr. 8,500
To Accounts Receivable 8,500
(Being collections recorded)
11.
01/10 Dividend payable Dr. 3,325
To Cash 3,325
(Being dividend paid)
12. The question is not completely visible (assumed purchase of 70 unit @x rate)
(Date) Purchase A/c Dr. 70x
To Accounts Payable 70x
(Being purchase of 70 units @ x)
13 and 14.
15/01 Depreciation A/c Dr. 200 [(Purchase price 25,000 - Residual value 1,000)/ (5 years * 12 months * 2 for half month)]
To Accumulated Depreciation A/c 200
(Being depreciation on Equipment recorded for 15 days)
15/01 Cash Dr. 23,000
Accumulated Depreciation A/c Dr. 2,600 (2400+200)
To Equipment 25,000
To Profit on sale of Equipment 600 (Balancing figure)
(Being Equipment sold)
15.
01/15 Salaries and Wages Dr. 2,000 (4,000/2)
Employer's FICA Expense Dr. 150 (Employers' equal contribution)
To Withheld Income Tax payable 250
To FICA Payable 300 (Employees 150 + Employer's 150)
To Salaries and Wages Payable 1,600 (Balancing figure)
(Being salaries and wages due)
01/15 Salaries and Wages A/c Dr. 50
To Unemployment Tax Payable 50
(Being unemployment taxes due)
01/16 Salaries and Wages Payable Dr. 1,600
To Cash 1,600
(Being salaries and wages paid)
16.
01/17 Notes Payable Dr. 22,000
Interest payable Dr. 495
Interest expense Dr. 90
To Cash 22,585
(Being notes payable setlled)
17.
01/27 Accounts Receivable Dr. 4,770
To Sales 4,500 (30 units @150 per unit)
To Sales Tax Payable 270 (Sale $4,500 * Tax rate 6%)
(Being sales of 30 units on account)
18.
01/27 Accounts Receivable Dr. 4,770
To Sales 4,500 (30 units @150 per unit)
To Sales Tax Payable 270 (Sale $4,500 * Tax rate 6%)
(Being sales of 30 units on account)
19.
01/29 Unearned Revenue A/c Dr. 3,750 (25 units * $150) or (Unearned revenue 4,500 /30 * 25)
To Sales 3,750
(Being unearned revenue recognised as sale)
20.
01/29 Unearned Revenue A/c Dr. 3,750 (25 units * $150) or (Unearned revenue 4,500 /30 * 25)
To Sales 3,750
(Being unearned revenue recognised as sale)
21.
01/30 Cash Dr. 81,420
Loss on Issue of Bonds 8,580
5% Bonds Payable 90,000
(Being 6 year bond issued)
22.
01/31 Depreciation Dr. 380 (Value of vehicle 10,000 / Total units 50,000 * used units 1,900)
To Accumulated depreciation 380
(Being depreciation on vehicle recorded)
23.
01/31 Bad Debts A/c Dr. 627.90 (2% of 31,395) (Ignoring repeated sales/ line items)
To Allowance for Doubtful Accounts 627.90
(Being provision for bad debts created)
24.
01/31 Rent Dr. 1,600
To Prepaid Rent 1,600
(Being rent expense adjusted against prepayment)
25.
01/31 Salaries and Wages Dr. 2,000 (4,000/2)
Employer's FICA Expense Dr. 150 (Employers' equal contribution)
To Withheld Income Tax payable 250
To FICA Payable 300 (Employees 150 + Employer's 150)
To Salaries and Wages Payable 1,600 (Balancing figure)
(Being salaries and wages due)
01/31 Salaries and Wages A/c Dr. 50
To Unemployment Tax Payable 50
(Being unemployment taxes due)
02/01 Salaries and Wages Payable Dr. 1,600
To Cash 1,600
(Being salaries and wages paid)
26.
01/31 Corporate income tax expense Dr. 3,750
To Corporate income tax payable 3,750
(Being corporate tax for january accrued)
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