Facts:

Alternative Energy Corporation formed in 2004. It is authorized to issue 100,000 shares of common stock at $5 par value.
It has 25,000 shares issues and outstanding.
All long-term tangible assets are depreciated using straight line depreciation.
All long-term intangible assets are amortized using straight line amortization.
They use the perpetual inventory system to record inventories.
There are no sales returns and allowances, nor sales discounts.

Transactions occurring during 2008:

a. After review of accounts receivables, management determined that 3% of A/R may not be collectible and adjusts the account.
They use the allowance method.

b. The company buys a truck for $10,000 cash. They estimate it will be useful for 10 years with no salvage value.

c. The company received a 120-day, 8% note for $50,000 from a client.

d. The company bought a patent for $15,000 from its competitor who is going out of business.

e. The company issued 1,000 shares of $5 par value common stock for $15,000.

f. The company borrowed $8,000 in cash at 10% interest from a bank. The note is due January 1, 2009.

g. The company bought $300,000 in inventory on credit.

h. The company expects to expand operations. On July 1st, it buys more store equipment for $100,000. It financed the transaction with a down payment of $10,000 and finances the balance.
It must pay back the loan at 10% interest over 5 years.

I. The company sold 100 solar panels for $3,000 each.

j. For transaction (I), each solar panel cost $3,000 to purchase, and carries a two-year warranty. Five percent of the solar panels typically need to be replaced over the warranty period.

k. The corporation purchased 1,000 shares of its $5 par common stock at $10.

l. The company declared a .20 cash dividend to be paid during this year.

m. The company sold 500 of the shares bought in transaction (k) at $20.

n. The company declared a 10% stock dividend to be issued this year. The stock is currently selling at $30 per share.

o. The company paid the cash dividend.

p. The company issued the stock dividend.

q. The company issue 2,000 shares of its common stock for a truck estimated by its owner to be worth $45,000. The stock of the company was trading on the NASDAQ for $25 per share.

r. The company split the stock 2 for 1.

s. The company paid $60,000 in sales commissions to employees.

t. The company incurred $25,000 in routine repair expenses to maintain store equipment.

u. The company received notice tha it is being sued for $90,000 by a customer who was cut installing a solar panel.
The lawyers believe that $90,000 is a reasonable estimate and it is probable that the company will lose the lawsuit when it goes to trial in two years.

v. The company paid $40,000 cash in utility bills.

w. The company used $2,000 of its prepaid insurance.

x. The company used $1,500 of its store supplies.

PREPARE JOURNAL ENTRIES FOR THESE TRANSACTIONS

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