Explore BrainMass

Financial Accounting and Journalizing

Section II
On January 1, 2002, John Diego Company had Accounts Receivable $146,000, Notes Receivable of $15,000, and Allowance for Doubtful Accounts of $13,200. The note receivable is from Trudy Borke Company. It is a 4-month, 12% note dated December 31, 2001. John Diego Company prepares financial statements annually. During the year the following selected transactions occurred.

Jan. 5 Sold $18,000 of merchandise to Jones Company, terms n/15.

20 Accepted Jones Company's $18,000, 3-month, 9% note for balance due.

Feb. 18 Sold $8,000 of merchandise to Swan Company and accepted Swan's $8,000, 6-month, 10% note for the amount due.

Apr. 20 Collected Jones Company note in full.

30 Received payment in full from Trudy Borke Company on the amount due.

May 25 Accepted Avita Inc.'s $6,000, 3-month, 8% note in settlement of a past due balance on account.

Aug. 18 Received payment in full from Swan Company on note due.

25 The Avita Inc. note was dishonored. Avita Inc. is not bankrupt; future payment is anticipated.

Sept. 1 Sold $12,000 of merchandise to Jose Trevino Company and accepted a $12,000,
6-month, 10% note for the amount due.

Journalize the transactions.

On July 1, Perez Corporation purchases 500 shares of its own $5 par value common stock at a cash price of $7 per share. On September 1, it sells 300 shares of the treasury stock for cash at $10 per share.

Journalize the two treasury stock transactions.

St. Louis Corporation has the following account balances at December 31:
Common Stock, $10 par, 5,000 shares issued $50,000
Paid-in Capital in Excess of Par Value $10,000
Retained Earnings $29,000
Treasury Stock?Common, 500 shares, $7,000.

Prepare the stockholders' equity section of the balance sheet.

The balance sheet for Chicago Inc. shows the following:
total paid-in capital and retained earnings $860,000
total stockholders' equity $840,000
common stock issued 44,000 shares
common stock outstanding 40,000 shares.

Compute the book value per share.

Presented below are various receivable transactions entered into by Lawson Tool Company. Indicate whether the receivables are reported as accounts receivable, notes receivable, or other receivables on the balance sheet.
a. Advanced $1,000 to a trusted employee.
b. Accepted a $2,000 promissory note from a customer as payment on account.
c. Determined that a $10,000 income tax refund is due from the IRS.
d. Sold goods to a customer on account for $5,000.
e. Recorded $500 accrued interest on a note receivable due next year.
f. Made an American Express credit card sale for $3,000.
g. Loaned a company officer $4,000.

Compute the missing amount for each of the following notes:

Principal Annual Interest Rate Time Total Interest
(a) $10,000 10% 2.5 years ?
(b) $120,000 ? 9 months $10,800
(c) ? 10% 90 days $1,000
(d) $40,000 9% ? $1,200


Rogers Company purchased a new computer for $100,000. It is estimated that the computer will have a $10,000 salvage value at the end of its 5-year useful service life. The double-declining-balance method of depreciation will be used.

Prepare a depreciation schedule which shows the annual depreciation expense on the computer for its 5-year life.

Beginning Depreciation Accumulated End of year
Year Book Value X RATE Expense Depreciation Book Value

The corporate charter of Gordon Corporation allows the issuance of a maximum of 2,000,000 shares of $1 par value common stock. During its first three years of operation, Gordon issued 1,200,000 shares at $15 per share. It later acquired 30,000 of these shares as treasury stock for $20 per share.
Based on the above information, answer the following questions:
(a) How many shares were authorized?
(b) How many shares were issued?
(c) How many shares are outstanding?
(d) What is the balance of the Common Stock account?
(e) What is the balance of the Treasury Stock account?

Cone Company had total operating expenses of $150,000 in 2003, which included Depreciation Expense of $20,000. Also, during 2003, prepaid expenses increased by $5,000 and accrued expenses decreased by $8,700.
Calculate the amount of cash payments for operating expenses in 2003 using the direct method.

Selected data for Connie's Store appear below.
2004 2003
Net sales $800,000 $520,000
Cost of goods sold 600,000 345,000
Inventory at end of year 65,000 85,000
Accounts receivable at end of year 90,000 70,000

Compute the following for 2004:
(a) Gross profit rate.
(b) Inventory turnover.
(c) Receivables turnover.


Solution Summary

Journalizing problems are solved.