Please complete only the journal entries. The Best Business Solutions Incorporated had the following balance sheet as
Question:
Please complete only the journal entries.
The Best Business Solutions Incorporated had the following balance sheet as of December 31, 2022. The transactions for the first three months of 2023 are also presented along with other information about specific accounts.
Best Business Solutions Incorporated
Balance Sheet
December 31, 2022
ASSETS | LIABILITIES | |||
Cash | $139,500 | Accounts Payable | $ 40,000 | |
Marketable Securities | 20,000 | Wages Payable | 10,800 | |
Accounts Receivable | 103,000 | Taxes Payable | 7,200 | |
All. Uncoll. Accounts | -4,000 | Short-Term Note Payable | 80,000 | |
Inventory | 134,000 | Interest Payable | 10,000 | |
Supplies | 5,000 | Unearned Revenue | 30,000 | |
Prepaid Insurance | 9,000 | Unearned Consulting Rev. | 20,000 | |
Total Current Assets | $406,500 | Total Current Liabilities | $ 198,000 | |
Land | $111,500 | Long-Term Notes Payable | $ 50,000 | |
Equipment | 217,000 | Bonds Payable | 100,000 | |
Accum. Depreciation-Eq | -97,000 | Mortgage Payable | 350,000 | |
Building | 590,000 | Total Long-Term Liabilities | $500,000 | |
Accum. Depreciation-Bl. | -110,000 | Total Liabilities | 698,000 | |
Intangible Assets | 60,000 | STOCKHOLDER EQUITY | ||
Total Long-Term Assets | $771,500 | Common Stock | $200,000 | |
Paid in Capital-CS | 50,000 | |||
Retained Earnings | 230,000 | |||
Total Stockholders Equity | $480,000 | |||
Total Assets | 1,178,000 | Total Liabilities & Equity | 1,178,000 |
Additional Information
Accounts Receivable
The following table indicates the historical breakout of accounts receivable
Days | Current | 30 to 60 | 60 to 90 | Over 90 |
Percent of Balance | 50% | 30% | 15% | 5% |
Percent Collectible | 95% | 90% | 80% | 60% |
The company uses the gross method of recording all sales on accounts.
Marketable Securities
The interest rate earned on marketable securities is 8.0%.
Inventory
In 202x, the company had used the gross method to record inventory purchases on account.
Prepaid Insurance
A three-year insurance policy in the amount of $10,800 was purchased on July 1, 2022.
Equipment
Equipment is depreciated at an average amount of $4,000 per month.
Building
The current building was purchased on January 1, ten years ago and has an expected 40-year life at which time its salvage value will be $40,000.
Intangible Assets
Intangible assets were initially valued at $60,000 and are being depreciated over 30 years at $2,000 per year.
Short-Term Notes Payable
The one-year short-term note payable is due on March 1, 2023. The interest rate is 15.0% which is payable at maturity.
Long-Term Notes Payable
The long-term notes payable are due in ten years. The interest rate on the notes is 6.0%.
Bonds Payable
The bonds payable mature in twenty years. The interest rate on the bonds is 10.0%.
Mortgage Payable
The following amortization schedule can be used for the January, 2023 mortgage payment on the 8.0%, 30- year mortgage.
Month | Payment | Interest | Principal | Balance |
January | $3,000 | $2,563 | $437 | $350,000 $349,563 |
February | $3,000 | $2,553 | $447 | $349,116 |
March | $3,000 | $2,543 | $457 | $348,659 |
Capital Stock
The capital stock is common stock at $10 par value with 50,000 shares authorized, and 20,000 shares issued and outstanding.
(17) Jan 31 Collected $40,000 from an accounts receivable, and there was a sales discount for the payment of receivables within the ten day discount period.
(18) Jan 31 Salary expenses in the amount of $15,000 and tax expenses in the amount of $8,000 were paid.
(19) Jan 31 The Company paid for repairs on equipment $5,500.
(20) Jan 31 A bill in the amount of $3,500 for advertising expenses incurred during the month of January was received (use advertising payable).
(21) Jan 31 The monthly payment for January of the mortgage payable was made-(see table.)
(22) Jan 31 Consulting services on account for the month were $35,000. Included in this amount was $20,000 advanced payment previously received in the unearned consulting revenue account.
(23) Jan 31 In order to make a sale the company paid $2,200 to have goods shipped to a customer.
(24) Feb 1 The Company made a new issue of 10,000 shares of $10.00 par value common stock for cash. The market price of the stock was $30 per share.
(25) Feb 2 A petty cash fund in the amount of $1,000 was established.
(26) Feb 3 The Company bought back 2,000 shares of its own common stock for $20 per share and reports the purchase as treasury stock.
Di
(27) Feb 8 The purchase of inventory on account on Jan 30th which was reported at the gross amount was paid in full less the discount.
(28) Feb 10 The dividend declared on January 5th was paid.
(29) Feb 15 Cash sales for two weeks equaled $54,000. The cost of inventory sold equaled $22,500.
(30) Feb 15 Consulting services for cash for two weeks was $28,000.
(31) Feb 20 The Company purchases $70,000 of inventory on account with the terms 2/10, net 30.
(32) Feb 20 The Company paid freight charges of $4,500 for the inventory purchase.
(33) Feb 27 The Company paid an advertising bill for $7,500 which included the February advertising expense of $4,000 plus the balance due from January.
Revenue
(34) Feb 28 Cash sales for two weeks equaled $65,000. The cost of inventory sold equaled $30,000.
(35) Feb 28 Consulting services for the on credit for the two weeks totaled $39,000.
(36) Feb 28 The monthly payment for February of the mortgage payable was made-(see table.)
(37) Feb 28 The Company collected on an accounts receivables for $70,000 less a total sales discount for the payment of receivables within the ten day discount period.
(38) Feb 28 Salary expenses in the amount of $18,000 and tax expenses in the amount of $9,000 were paid.
(39) Feb 28 The Company paid property tax bill of $5,800.
(40) Feb 28 Sales on account for the month of February totaled $85,000 with the terms 2/10, net 30. The cost of inventory sold equaled $42,800.
Required
1. Complete journal entries for each of the transactions. The numbers in the journal entries can be rounded to the nearest dollar (no cents please). Please record the journal entries using the numbers NOT the dates!