EZ Curb Company completed the following transactions. The annual accounting peri
ID: 2565617 • Letter: E
Question
EZ Curb Company completed the following transactions. The annual accounting period ends December 31. Jan. 8 Purchased merchandise on account at a cost of $26,000. (Assume a perpetual inventory system.) 17 Paid for the January 8 purchase. Apr. 1 Received $59,200 from National Bank after signing a 12-month, 18.0 percent, promissory note. June 3 Purchased merchandise on account at a cost of $30,000. July 5 Paid for the June 3 purchase. Aug. 1 Rented out a small office in a building owned by EZ Curb Company and collected six months’ rent in advance, amounting to $13,200. (Use an account called Unearned Revenue.) Dec. 20 Collected $340 cash on account from a customer. Dec. 31 Determined that wages of $11,300 were earned but not yet paid on December 31 (ignore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest. Dec. 31 Adjusted the accounts at year-end, relating to rent. Required: 1. Prepare journal entries for each of the transactions through December 20. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
1. Record the purchase of inventory for $26,000 on account.
2.Record the payment for inventory in full.
3. Record the borrowing of $59,200.
4. Record the purchase of inventory for $30,000 on account.
5. Record the payment for inventory in full.
6. Record the collection of six months rent in advance amounting to $13,200.
7. Record the receipt of a deposit from a customer of $340.
Prepare any adjusting entries required on December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
1.Record the wages earned, but not yet paid as of December 31.
2. Record the adjusting entry relating to interest.
3.Record the adjusting entry relating to rent.
Show how all of the liabilities arising from these items are reported on the balance sheet at December 31. (Do not round intermediate calculations.)
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Prepare any adjusting entries required on December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
1.Record the wages earned, but not yet paid as of December 31.
2. Record the adjusting entry relating to interest.
3.Record the adjusting entry relating to rent.
3.Show how all of the liabilities arising from these items are reported on the balance sheet at December 31. (Do not round intermediate calculations.)
EZ CURB COMPANY Balance Sheet (partial) At December 31+
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Explanation / Answer
Date Particulars Debit Credit Jan-08 Inventory A/c 26,000 To Accounts Payable 26,000 (being inventory purchased on account) Jan-17 Accounts payable A/c 26,000 To Cash 26,000 (being the payment for the purchase made) Apr-01 Cash A/c 59,200 To Notes Payable A/c 59,200 (being promisory signed for 12months @18%) Jun-03 Inventory A/c 30,000 To Accounts Payable 30,000 (being inventory purchased on account) Jul-05 Accounts payable A/c 30,000 To Cash 30,000 (being the payment for the purchase made) Aug-01 Cash A/c 13,200 To Unearned Revenue A/c 13,200 (being received Rent in advance for six months) Dec-20 Cash A/c 340 To Accounts receivable A/c 340 (being cash received from customer) Dec-31 Wages A/c 11,300 To Wages Payable 11,300 (being wages earned but not paid) Dec-31 Interest A/c 7,992 To Interest Payable A/c 7,992 (being interest on promisory note accrued ) Dec-31 Unearned Revenue A/c 11,000 To Revenue A/c 11,000 ( being rent for 5 months recorded as revenue) Calculation of Interest: Principle amount 59,200 Months 12 Interest rate 18% Interest per year 10,656 Interest for one month 888 Time lapsed (april - december) 9 Interest accrued but not paid 7,992 Calculation of Revenue from rent: Advance received 13,200 Months 6 Rent per month 2,200 Time lapsed (august - december) 5 Rent revenue earned 11,000 EZ CURB COMPANY Balance Sheet (partial) At December 31 Notes Payable 59,200 Wages Payable 11,300 Interest payble 7,992 Unearned Revenue 2,200 Working notes: Calculation of Unearned Revenue: Unearned Revenue recorded 13200 Revenue recorded for this accounting year 11000 Balance Unearned Revenue 2200
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