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(Solved): #1: Donald Reagan started a new business in November of the current year. The following are the busi ...



#1:

Donald Reagan started a new business in November of the current year. The following are the business transactions completed by The DR Consulting Company during the month of November.

Note: the company uses a perpetual, FIFO cost flow system for inventory.

Using the following transactions, record journal entries for The DR Consulting Company. If no journal entry is needed input "No Journal Entry Needed".

November 1 Donald Reagan invested $116,000 cash along with office equipment valued at $26,700 in exchange for 11,750 shares of common stock of a new company named The DR Consulting Company. The common stock has a $1 par value/share.

November 2 The company purchased a 6-month insurance policy by paying the insurance company $630 cash.

November 3 The company purchased land valued at $49,000 and a building valued at $164,500. The purchase is paid with $31,500 cash and a long-term note payable for $182,000.

November 5 The company purchased $4,400 of office supplies on credit with terms n/15.

November 7 Donald Reagan invested an automobile in the company in exchange for more common stock. The automobile has a value of $20,730.

November 9 The company purchased 3,900 units of inventory for $11.94 per unit with terms n/30.

November 11 The company paid $3,250 cash salary to an assistant.

November 13 The company provided services to a client and collected $6,175 cash.

November 14 The shipping cost for the inventory purchase of November 9, was $520 with terms FOB Destination.

November 15 The company paid $137 cash for this month’s utilities.

November 16 The company sold 3,100 units of inventory to Big Al's for $23.00 per unit with terms 2/10,n/30.

November 17 The company paid $4,400 cash to settle the account payable created on November 5.

November 19 The company purchased $20,700 of new office equipment by paying $20,700 cash.

November 20 The company purchased 5,580 units of inventory for $12.18 per unit with terms 1/15,n/30.

November 21 The company completed $6,550 of services for a client on credit, who must pay within 30 days.

November 22 The shipping costs for the inventory sale of November 16, were $320 with terms FOB Destination.

November 23 The company paid $3,250 cash salary to an assistant.

November 24 The company received payment from Big Al's for the sale made on November 16.

November 25 The company received $4,520 cash in partial payment on the receivable created on November 21.

November 26 The shipping cost for the inventory purchase of November 20, was $279 with terms FOB Shipping Point.

November 27 The company sold 2,500 units of inventory to Little Matt's for $23.00 per unit for cash.

November 30 The shipping costs for the inventory sale of November 27, were $260 with terms FOB Shipping Point.

Note: Round all dollar amounts to the nearest whole dollar. Do not round the interim calculations, only round the final answers.

#2:

For The DR Consulting Company you are given the following Unadjusted Trial Balance at the end of December, the second month of business. You are also given the information for adjusting entries. Prepare the necessary adjusting entries at the end of the second month presuming no adjusting entries were done at the end of November. If additional information does not require an adjusting entry, input "No transaction needed" in the first line of the journal entry.

Account Debit Credit
Cash $ 29,655
Accounts receivable 2,800
Interest receivable 0
Supplies 19,670
Prepaid insurance 3,420
Notes receivable

12,000

Land 100,000
Buildings 216,000
Equipment 129,600
Accumulated Depreciation - Buildings $ 0
Accumulated Depreciation - Equipment 0
Account payable 7,200
Salaries payable 0
Interest payable 0
Income tax payable 1,500
Unearned revenue 3,325
Notes payable 177,000
Common stock 309,000
Retained earnings 0
Cash dividends 1,200
Service revenue 38,910
Rent revenue 400
Interest revenue 0
Depreciation expense 0
Salaries expense 17,610
Insurance expense 0
Rent expense 1,475
Supplies expense 0
Utilities expense 2,405
Interest expense 0
Income tax expense 1,500
Totals $ 537,335 $ 537,335

Additional information:

1. DR Consulting determined that the prepaid insurance was paid at the beginning of November and is for 12 months of insurance benefits that began at the beginning of November.

2. DR Consulting determined there are $3,880 of supplies remaining at the end of December.

3. The equipment that the company owns is depreciated using the straight-line method of depreciation over a 10-year period and is estimated to be worth $15,600 at the end of the ten years.

4. The building that the company owns is depreciated using the straight-line method of depreciation over a 50-year period and is estimated to be worth $0 at the end of the 50 years.

5. The company has agreed to provide consulting services for Timmy Carter for $11,500. Timmy will pay DR Consulting when the services are completed. As of December 31, the company has provided 60% of the services, but has not billed or recorded the services already provided.

6. The note receivable for $12,000 was obtained by providing services to a customer. The services were completed December 1. The customer agreed to pay the principal and interest of the 5% note in 2 months on February 1.

7. DR Consulting has agreed to complete consulting work for Lonny Kennedy starting in January. Lonny has agreed to pay DR Consulting $14,000 for the services that will be provided.

8. A client paid DR Consulting $3,325 for consulting services to be provided during the months of December-February. As of the end of December DR has provided 44% of those services.

9. The company has an employee they have agreed to pay $295/day. The employee worked 6 days at the end of December for which the employee has not been paid, and the salary has not been recorded.

10. The note payable for $177,000 with an 5% interest rate was obtained on November 1, to purchase the Land & Building. The company is required to make annual payments of $11,514 every October 31. The company has not done any accruals for this note.



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