[trca4596]

I have bee working on a few assignments that are taking forever. I get the general idea, but need someone (or a few people) to just look over my work and give me advice. I am at a brain block as they might say.

Balance Sheet Jan 1, 20xx
Assets:
Cash 4,240
Accts Receivable 6,800
Inventory 15,200
Buildings & equipment 16,780
Accum depr. (4780)
Land (for expansion) 9,000
Total assets: 47,240

Liabilities & Equity:
Wages payable 640
Capital stock 33,000
Retained earnings 13,600
Total: 47,240

The events from 1st quarter (Jan, Feb, March): (NOTE there are more but these are ones I can't get)

1. Wages and salaries totaling 3,200 were paid. Of this amount, 20% was to liquidate wages payable that arose in 4th quarter of previous year. The company has a policy of not making wage or salary advances to employees.

2. Sales totaling 18,000 were made to customers. Of that, 60% was collected during 1st quarter, and balance is expected to be collected during the next quarter. The goods that were sold had cost 13,000 when purchased.

3. New shares of stock were sold by company for 2,000 in cash.

4. Land that had been held was sold for 9,000.


MY ANSWERS: (I THINK)
1. This one want to Credit wages payable, but unsure what to debit. The "liquidate" loses me.
2.Since no income statement-Make a new account for sales?
Debit cash, and credit sales revenue?
3. Debit cash, Credit Stock.
4. Debit cash, Credit Land.

If anyone can please help, I would really appreciate it! :)

[pready]

No. 1. Wages paid $3,200 * 20% = $640 of Wages Payable. Your adjusting entry will Be:
Debit Wages Payable for 640
Debit Wages Expense for 2,560
Credit Cash for 3,200

No. 2. Sales of $18,000 * 60% = $10,800 collected. Your adjusting entry will be:
Debit Cash for 10,800
Debit Accounts Receivable for 7,200
Credit Sales Revenue for 18,000

Also you will have an entry for COGS. It is:
Debit COGS (Cost Of Goods Sold) for 13,000
Credit Inventory for 13,000

Numbers 3 and 4 are correct.

[trca4596]

Thank you so much. There were a few others one that I was stuck on too. Hopefully I got them right. But thank you :) :) Helped so much. And it makes sense now!

[trca4596]

Here's another one. I think I may have it right, But feel like been erasing so much I'm wrong.

a. A new 3 year lease agreement was signed and executed. The lease required that a 900 monthly rental be paid in advance for the first 2 quarters of the current year. (total paid is 5400= 900 x 6months)

MY ANSWER:

debit prepaid rent: 1800
debit rent expense: 3600
credit cash: 5400??

[ArcSine]

At the moment you cut that first check, it's all prepaid, since you haven't actually occupied the premises for any period yet.

Prepaid rent debit 5,400
Cash credit 5,400

The prepaid only becomes an expense as you use the property each month. So after you've used the property for a month...

Rent expense debit 900
Prepaid rent credit 900

You'll also make that same entry 5 more times, once after each succeeding month of using the property. After six months, each of those six months will have Rent Expense of 900 on its Income Statement--as it should--and the Prepaid account will have been reduced to zero.