Assets Cash $500,000 Accounts Receivable 700,000 Inventory 300,000 Property, Pla
ID: 2525390 • Letter: A
Question
Assets
Cash $500,000
Accounts Receivable 700,000
Inventory 300,000
Property, Plant & Equipment 900,000
Accumulated Depreciation (100,000) 800,000
Total Assets $2,300,000
Liabilities & Equity
Accounts Payable $300,000
Notes Payable 1,000,000
Common Stock 500,000
Retained Earnings 500,000
Total Liabilities & Equity $2,300,000
Journal Entries for January 2013
Transaction 1: Services Provided for Cash
Description: Receives $155,000 cash from customers for programming services it has provided.
Journal Entry: Dr. Cr.
Cash 155,000
Sales 155,000
Transaction 2: Receipt of Cash on Account
Description: Receives $28,000 in cash from customers who had been billed for services.
Journal Entry: Dr. Cr.
Cash 28,000
Accounts Receivable 28,000
Transaction 3: Cost Flow Assumption: LIFO
Description: Recorded $45,000 in cost of goods sold under the LIFO cost flow assumption.
Journal Entry: Dr. Cr.
Cost of Goods Sold 45,000
Inventory 45,000
Transaction 4: Recording Depreciation Expense
Description: Recorded depreciation expense under the straight-line method.
Journal Entry: Dr. Cr.
Depreciation Expense 9,000
Accumulated Depreciation 9,000
Transaction 5: Sale of Plant Asset
Description: Sale of plant asset for cash. The cash received was equal to the book value.
Journal Entry: Dr. Cr.
Cash 3,000
Accumulated Depreciation 16,000
Equipment 19,000
Transaction 6: Gain on Sale of Plant Asset
Description: Sale of plant asset for cash. The cash received was $2,000 more than the book value resulting in a gain.
Journal Entry: Dr. Cr.
Cash 5,000
Accumulated Depreciation 16,000
Gain 2,000
Equipment 19,000
Transaction 7: Loss on Sale of Plant Asset
Description: Sale of plant asset for cash. The cash received was $500 less than the book value resulting in a loss.
Journal Entry: Dr. Cr.
Cash 2,500
Loss 500
Accumulated Depreciation 13,000
Equipment 16,000
Transaction 8: Note Given to Borrow from Bank
Description: Borrowed $2,000 cash with a 60-day, 12%, $2,000 note.
Journal Entry: Dr. Cr.
Cash 2,000
Notes Payable 2,000
Transaction 9: Payment of Note
Description: Paid the principal and interest on the note in Transaction 8.
Journal Entry: Dr. Cr.
Notes Payable 2,000
Interest Expense 40
Cash 2,040
Transaction 10: Bond Issue
Description: Issued a $100,000 Par Value Bond at a Discount
Journal Entry: Dr. Cr.
Cash 96,454
Bonds Payable 96,454
Transaction 11: Effective Interest Amortization
Description: Recorded bond interest expense under the effective interest method.
Journal Entry: Dr. Cr.
Bond Interest Expense 4,823
Bonds Payable 823
Cash 4,000
Transaction 12: Issuing Par Value Stock at a Premium
Description: Issued common stock and received cash of $50,000 in excess of par value.
Journal Entry: Dr. Cr.
Cash 350,000
Common Stock , $10 Par Value 300,000
Paid-in Capital in Excess of Par Value, Common Stock 50,000
Transaction 13: Dividend
Description: The corporation pays a dividend of $3,800 in cash to the stockholders of Softbyte.
Journal Entry: Dr. Cr.
Dividends 3,800
Cash 3,800
1. What is the ending cash balance?
A. $1,132,114
B. $1,235,553
C. $1,339,885
D. $1,433,559
2. What is the ending accounts receivable balance?
$675,000
B. $672,000
C. $680,000
D. $685,000
3. What is the ending inventory balance?
A. $250,000
B. $255,000
C. $260,000
D. $264,000
4. What is the ending equipment balance net of accumulated depreciation?
A. $755,000
B. $768,000
C. $775,000
D. $782,000
Explanation / Answer
Answer 1-A. $1,132,114 Cash Beg. Bal. 500,000.00 2,040.00 Trans 9 Trans 1 155,000.00 4,000.00 Trans 11 Trans 2 28,000.00 3,800.00 Trans 13 Trans 5 3,000.00 Trans 6 5,000.00 Trans 7 2,500.00 Trans 8 2,000.00 Trans 10 96,454.00 Trans 12 350,000.00 End. Bal. 1,132,114.00 Answer 2-B. $672,000 Accounts Receivable Beg. Bal. 700,000.00 28,000.00 Trans 2 End. Bal. 672,000.00 Answer 3-B. $255,000 Inventory Beg. Bal. 300,000.00 45,000.00 Trans 3 End. Bal. 255,000.00 Answer 4-D. $782,000 Property, Plant & Equipment Beg. Bal. 900,000.00 19,000.00 Trans 5 19,000.00 Trans 6 16,000.00 Trans 7 End. Bal. 846,000.00 Accumulated Depreciation Beg. Bal. 100,000.00 Trans 5 16,000.00 9,000.00 Trans 4 Trans 6 16,000.00 Trans 7 13,000.00 End. Bal. 64,000.00 Ending Equipment Balance (Net) = $846,000 - $64,000 Ending Equipment Balance (Net) = $782,000