Analyze each transaction and prepare the appropriate journal entry.

1. Using T-accounts (you are not required to submit your T-account work) prepare an Unadjusted Trial Balance in good form.

The following transactions occurred during May 2020 for the All right Corporation. The company owns and operated a wholesale warehouse.

May 1. Issued 32,500 shares of Common Stock in exchange for $325,000 in cash.

May 1. Purchased equipment at a cost of $36,000. $12,000 cash was paid and a long term note payable (terms 8%, due in 6 months) to the seller was signed for the remaining balance owed. The equipment is expected to have a 6 year useful life and have a resale value of $6,000 at the end of that time.

May 3. Purchased inventory on account at a cost of $97,000. The company uses the perpetual inventory system.

May 4. Credit sales for the month totaled $150,000. The cost of the good sold was $75,445.

May 5. Paid $8,800 in rent on the warehouse building for the months of May and June 2020.

May 6. Paid $5,100 to an insurance agency for fire and liability insurance for a one-year period beginning May 1, 2020.

May 7. Paid $75,000 on account for the merchandise purchased on May 3.

May 8. Collected $68,750 from customer on account.

May 10. Purchased $1,200 of supplies for office use.

May 25. Cash dividends of $1,000 were declared and paid.

Section 2.

Analyze the following unrecorded transactions and prepare the appropriate adjusting entries for the Allright Corporation, for the month ended May 31.

Interest on the note payable has not been paid yet.

1. Depreciation expense has not been recorded.
2. Supplies inventory revealed that only $800 of supplies remain.
3. Employee salaries for the month of May 2020 of $6,000 will be paid on June 3, 2020.

Section 3.

Continuing from Section 1 and 2 above for Allright Corporation –

1. Prepare the Adjusted Trial Balance, in good form.
2. Prepare the Balance Sheet, in good form.

Answer rating: 100% (QA)

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