Create Journal Entries for Each of the following: 10/1/2015 – Luigi invested $18
ID: 2461469 • Letter: C
Question
Create Journal Entries for Each of the following:
10/1/2015 – Luigi invested $180,000 cash to start up the business. He received no-par value common stock in return.
10/1/2015 – DigiFun borrowed $40,000 in short-term notes to be repaid in 6 months @ at annual interest rate equal: %5
10/1/2015 – Purchased shelving units (furniture) for $22,000 cash and video game platforms and televisions (equipment) for $11,000. These will be used in the store. The shelves have an estimated $1,000 salvage value and the equipment has no estimated salvage value.
Estimated useful lives are as follows:
Furniture = 5 years, Equipment = 3 years
10/2/2015 – Paid rent of $2,400 in cash for the period of October 2014 – March 2015.
10/2/2015 – Purchased copies of several different new video game titles to be held for sale. The video games cost a total of $1,378 ($26 for each game) and half of this was paid in cash and the other half was on credit.
10/3/2015 – Purchase office supplies on credit for $265
10/3/2015 – Paid for television advertising to be run in the month of October in cash of $2,000
10/4/2015 – Returned 4 copies of a new video game title purchased on 10/2 to the manufacturer. This was an error in ordering.
10/5/2015 – Paid remaining balance of 10/2 inventory purchase in full with cash.
10/7/2015 – Recorded sales for the first week of business.
New Video Game Sales: 23 games for $1,495 before discounts
Sales Discounts: $147
All sales were for cash
10/9/2015 – Purchased additional new video game inventory for a total of $600 of cash ($25 per game).
10/10/2015 – Paid for supplies purchase on 10/3 in full with cash
10/11/2015 – Hired a local repairman to adjust the sight level of shelves in the store. This service was done on account for $300 with terms 2/10 net 15.
10/13/2015 – 1 video game that was purchased on 10/7 was returned to the store by a customer for cash. No discounts were taken on that original sale.
10/13/2015 – Entered into a sales agreement with a local daycare. DigiFun will provide them with 2 new game titles every week at a total cost of $110. The service start date will be November 1st and no cash will be exchanged until that date.
10/14/2015 – Recorded sales for the 2nd week of business.
New Video Game sales 30 games for $1,950
All inventory sales were for cash
10/16/2015 – Paid employee wages in cash for time worked from 10/1 until 10/15. Gross wages were $1,300. FICA taxes represent 7.65% of gross wages. Employee federal income taxes payable amounts to $80 while federal and state unemployment taxes amount to 0.8% and 2.9% of gross wages, respectively.
10/17/2015 – Purchased a large lot of vintage video games at a local auction. Total purchase price was $336 in cash and this purchased 100 games.
10/18/2015 – Purchased additional new video game inventory on credit for a total of $3,240 ($27 per game).
10/19/2015 – Counted the cash drawer at closing time and noticed $16 cash was missing.
10/20/2015 – Sorted through the vintage video game purchase and found that half of the games purchased on the 17th (50 games) had $0 in resale value. An employee did find 3 specific games that are incredibly rare and in excellent condition. The market value of these 3 games is $700 a piece. DigiFun applies the lower of cost or market rule on the basis of individual items.
10/21/2015 – Recorded sales for week 3.
New Video Game sales: 52 games for $3,380, before discounts
Vintage Video Game sales 15 games for $255, before discounts
Sales discounts: $49 (new games only)
All sales were for cash
10/22/2015 – Sold all three rare vintage video games to a collector for $1,700. The collector paid $1,400 in cash and agreed to pay the rest on 10/29.
10/24/2015 – Created a purchase reservation list for an upcoming video game release. The game will not be available for sale until November, but customers can pay now and guarantee a copy will be available to them on the release date. 12 customers put their names on the list and paid a total of $780.
10/25/2015 – Paid utility bill in cash for $72
10/26/2015 – Received notice that vintage video game collector who purchased merchandise on 10/22 had declared bankruptcy. Wrote off entire receivable as uncollectible
10/28/2015 – Recorded sales for week 4
New Video Game Sales: 39 games for $2,535
14 of the New Video Game Sales were on account to the local school district and the rest were for cash.
Vintage Video Game Sales: 8 games for $136
10/29/2015 – 2 customers who paid with checks on 10/28 did not clear the bank and were NSF. Invoices were sent to the customers requesting payment. The total amount was $130.
10/29/2015 – Paid bill in full with cash for services provided on 10/11 by local repairman
10/30/2015 – Purchased several new titles to be placed in New Video Game Inventory for a total of $2,080. A total of 80 games were purchased and all were paid for with cash.
10/31/2015 – Recorded depreciation on the furniture and equipment. Furniture is depreciated on a straight-line basis and Equipment is depreciated using the double declining balance method.
10/31/2015 – Sold one of the video game platforms (equipment) that were being used in the store and were purchased on 10/1 for $180. Original purchase price was $400.
10/31/2015 – Accrued wages for employee hours worked from 10/16 – 10/31. Gross wages were $1,300. FICA taxes represent 7.65% of gross wages. Employee federal income taxes payable amounts to $80 while federal and state unemployment taxes amount to 0.8% and 2.9% of gross wages, respectively. Wages are to be paid on November 1st.
10/31/2015 – Recorded an estimate for bad debt expense of 2.5% of total accounts receivable.
10/31/2015 – Counted office supplies at the end of the month and accounted for $210 worth of supplies
10/31/2015 – Depending on how you recorded a few of the other transactions earlier in the month you may be some more adjusting entries that are required due to the passage of time.
Explanation / Answer
Journal Entry Date Particulars Dr. Amt. Cr. Amt Oct. 1 Cash Dr. 180,000 2015 To Common Stock 180,000 Oct. 1 Cash Dr. 40,000 2015 To Notes Payable - 5% 40,000 Oct. 1 Furniture (Shelving Units) Dr. 22,000 2015 Equipments (Platforms & TV) Dr. 11,000 To Cash 33,000 Oct. 2 Prepaid Rent Dr. 2,400 2015 To Cash 24,000 Oct. 2 Inventory Dr. 1,378 2015 To Cash 689 To Accounts Payable 689 Oct. 3 Office Supplies Dr. 265 2015 To Accounts Payable 265 Oct. 3 Advertising Exp. Dr. 2,000 2015 To Cash 2,000 Oct. 4 Accounts Payable Dr. 104 2015 To inventory - ($26 X 4 Nos) 104 Oct. 5 Accounts Payable (689-104) Dr. 585 2015 To Cash 585 Oct. 7 Cash Dr. 1,348 2015 Sales Discounts Dr. 147 To Sales 1,495 Oct. 7 Cost of Goods Sold Dr. 598 2015 To Inventory ($26 X 23 Nos) 598 Oct. 9 Inventory Dr. 600 2015 To Cash 600 Oct. 10 Accounts Payable Dr. 265 2015 To Cash 265 Oct. 11 Repair - Furniture Dr. 300 2015 To Repair Charges Payable 300 Oct. 13 Sales return (1495 / 23 nos) Dr. 65 2015 To Cash 65 Oct. 13 Inventory Dr. 26 2015 To Cost of Goods Sold 26 Oct. 13 No Entry 2015 No exchange of cash or any financial Transaction. Only agreement has been done Oct. 14 Cash Dr. 1,950 2015 To Sales 1,950 Oct. 14 Cost of Goods Sold Dr. 777 2015 To Inventory (27 Nos X $26 + 3 nos X $25) 777 Oct. 16 Salary Exp. Dr. 1,300 2015 To FICA Taxes Payble (7.65% X 1300) 99 To Federal I Tax Payable 80 To Cash 1,121 Oct. 16 Payroll Taxes Dr. 2015 To Federal Unemployment Taxes Payable 10 To State Unemployment Taxes Payable 38 Oct. 17 Inventory - Vintage Games Dr. 336 2015 To Cash 336 Oct. 18 Inventory Dr. 3,240 2015 To Accounts Payable 3,240 Oct. 19 Short - Cash Dr. 16 2015 To Cash 16 Oct. 20 Profit & Loss A/c Dr. 168 2015 To Inventory - Vintage 168 (50 Vintage Video games- FMV-0) Oct. 20 Inventory - Vintage Dr. 2,089.92 2015 To Profit & Loss A/c 2,089.92 Profit on Valuation of Rare Vintage Video Games - 3 X ($700 -3.36) Oct. 21 Cash Dr. 3,331 2015 Sales Discounts Dr. 49 To Sales 3,380 Oct. 21 Cost of Goods Sold Dr. 1,362 2015 To Inventory ($25 X 21 Nos + $27 X 31 nos) 1,362 Oct. 21 Cash Dr. 255 2015 To Sales 255 Oct. 21 Cost of Goods Sold Dr. 50.40 2015 To Inventory-Vintage (15Nos X$3.36) 50.40 Oct. 22 Cash Dr. 1,400 2015 Accounts Receivables Dr. 300 To Sales-Vintage 1,700 Oct. 22 Cost of Goods Sold Dr. 2,100 2015 To Inventory-Vintage (15Nos X$3.36) 2,100 Oct. 24 Cash Dr. 780 2015 To Customer -Advance (Liability) 780 Oct. 25 Utility Exp. Dr. 72 2015 To Cash 72 Oct. 26 Allowance for D Debts Dr. 300 2015 To Account Receivables 300 Oct. 28 Cash Dr. 1,625 2015 Accounts Receivables Dr. 910 To Sales 2,535 Oct. 28 Cost of Goods Sold Dr. 1,053 2015 To Inventory (39 Nos X $27) 1,053 Oct. 28 Cash Dr. 1,088 2015 To Sales - Vintage 1,088 Oct. 28 Cost of Goods Sold Dr. 27 2015 To Inventory (8 Nos X $3.36) 27 Oct. 29 Accounts Receivables Dr. 130 2015 To Cash 130 Oct. 29 Repair Charges Payable Dr. 300 2015 To Cash 300 Oct. 30 Inventory Dr. 2,080 2015 To cash 2,080 Oct. 31 Dep. Dr. 961.14 2015 To Accumulated Dep - Furniture 350.00 To Accumulated Dep - Equipment 611.14 Oct. 31 Cash Dr. 180.00 2015 Accumulated Dep. Dr. 22.22 Loss On sale of Equipment Dr. 197.78 To Equipment 400.00 Oct. 31 Salary Exp. Dr. 1,300 2015 To FICA Taxes Payble (7.65% X 1300) 99 To Federal I Tax Payable 80 To Cash 1,121 Oct. 31 Payroll Taxes Dr. 2015 To Federal Unemployment Taxes Payable 10 To State Unemployment Taxes Payable 38 Oct. 31 Supplies Exp. Dr. 55 2015 To Supplies 55 Oct. 31 Rent Exp. Dr. 400 2015 To Prepaid Rent (2400/6 Months) 400