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

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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 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 ...

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