Instructions: Prepare the journal entries for the following transactions. After
ID: 2460730 • Letter: I
Question
Instructions: Prepare the journal entries for the following transactions. After completing the journal entries, post the transactions to the ledger (t-accounts) and create an adjusted trial balance. Create the income statement, statement of retained earnings, balance sheet and cash flow statement for the following company. This is the first year of operations for Trout Corporation, a merchandise corporation that specializes in baseball apparel.
1-2-14: Issued 1000 shares of common stock for $50 per share.
1-2-14 Purchased equipment costing 10,000, paying cash. The equipment will have a useful life of 4 years and no salvage value, the company uses the straight-line method of depreciation.
1-2-14: Purchased 500 jerseys on account for $20 each. Trout Corporation will resell these jerseys in the future and uses the FIFO method.
1-2-14: Issued $25,000 of 4% bonds at par that mature on January 3, 2024. The bonds pay interest on July 1, and January 1 of every year.
1-31-14: During the month of January sold 100 jerseys on account for $50 each and 300 jerseys for cash at $50 each.
1-31-14: Trout Corporation uses the percent of sales method to estimate uncollectible accounts. Trout estimates that 5% of credit sales will be uncollectable.
1-31-14: Paid cash salaries of 5,000 to employees for the month of January. In addition, paid $2,000 for utilities on 1-31-14 for the month of January. 1-31-14: Record the depreciation for the equipment for the month of January.
1-31-14: Record the interest expense for the bond payable for the month of January.
1-31-14: Declared and paid a cash dividend on 1-31-14 of $2.00 per share.
Explanation / Answer
Journal Entries:
T-form Accounts:
Income Statement
Cash flow Statement:
Balance Sheet as on Jan 31, 2014
Date Accounts Titles and explanation Debit $ Credit $ Jan 2014 2 Cash 50000 Common stock 50000 2 Equipment 10000 Cash 10000 2 Inventory 10000 Accounts Payable 10000 2 Cash 25000 Bonds Payable 25000 31 Cash 5000 Accounts Receivables 15000 Sales revenue 20000 31 Bad Debts 250 Allowance for doubtful accounts 250 31 Depreciation on Equipment 208 Accumulated Depreciation 208 31 salary expense 5000 utilities expense 2000 Cash 7000 31 Interest Expense 83 Interest Payable 83 31 Dividend paid 2000 Cash 2000