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Sherman Co., Twilight, Inc., Visquel and Associates.

Record transactions. Prepare the journal entry for each of the following transactions that occurred during the first year of operations at Sherman Co.

Cost-flow assumptions - FIFO and LIFO using periodic and perpetual systems. The inventory records of Twilight, Inc., Reflected the following information for the year ended December 31, 2005

Other accrued liabilities - payroll. The following summary data for the payroll period ended on December 31, 2004, are available for Visquel and Associates.

(Please see full problems in the attached file)

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Record transactions. Prepare the journal entry for each of the following
transactions that occurred during the first year of operations at ShermanCo.

a. Issued common stock for cash
shares 400,000
par $6.00
total cash $2,400,000

Cash 2,400,000
Common Stock
(400,000 shares x $6.00) 2,400,000

When Sherman Co.issued common stock for cash, they will receive the cash, in which we
need to debit the cash account and credit the common stock for 400,000 shares.

b.At the beginning of the year, borrowed cash from the Lindquist National Bank
and signed a note.
amount borrowed $350,000
interest rate 6%
note due in 4 years

Cash 350,000
Notes Payable 350,000

Sherman Co. borrowed the cash from the Lindquist National Bank and signed the note. It
means that they received cash. So, we need to debit cash and credit notes payable.

d. Purchased merchandise inventory, paying part in cash and the rest on account.
amount paid in cash $300,000
amount on credit $275,000

Inventory 575,000
Cash 300,000
Accounts Payable 275,000

We need to debit the inventory account and credit cash and accounts payable. Since both
debit and credit account has to be equal, we can find the amount of inventory purchased by
adding cash and accounts payable.

e. Sold inventory on credit.
inventory cost $280,000
total sales $410,000

Accounts Receivable 410,000
Sales 410,000

Costs of Goods Sold 280,000
Inventory 280,000

When Sherman Co. sold inventory on credit, we need to debit accounts receivable and credit
sales account. As Sherman Co. uses perpetual inventory system, we need to record the
cost of goods sold when the sales is made. So, we debit the cost of goods sold account and
credit inventory account.

f. Paid rent of $121,000 on the sales facilities
during the first 11 months of the year

Rent Expense 121,000
Cash 121,000

When Sherman paid for rent on the sales facilities, we need to debit rent expense and credit
cash account.

g. Sold inventory for cash
inventory cost $200,000
total sales $290,000

Cash 290,000
Sales 290,000

Costs of Goods Sold 200,000
Inventory 200,000

When Sherman Co. sold inventory for cash, we need to debit cash account and credit
sales account. As Sherman Co. uses perpetual inventory system, we need to record the
cost of goods sold when the sales is made. So, we debit the cost of goods sold account and
credit inventory account.

h. Purchased store equipment, paying part in cash and
the rest on credit
equipment price $150,000
cash paid $65,000
remaining due ...

Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment in excel file.

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