Aquarium World Ltd$.($AWL$)$ was incorporated in $2017$ and imports fish tanks and related supplies for the saltwater aquarium market. AWL primarily imports from Asian suppliers and is a wholesaler supplying independent retailers in Western Canada.

During the month of January $2020,$ AWL had the following transactions:

Regular entries:

Jan. $1$ In order to better service its growing business and manage its inventory more effectively, AWL purchased new computer equipment to run its inventory system for $$150,000,$ paying cash. AWL$$s management determined that the new computer equipment would have a useful life of $5$ years and have a residual value of $$9,000.$

$1$ AWL also entered into an agreement to lease a warehouse. This would allow the company to import larger shipments from its Asian suppliers and reduce the impact of the long shipping times. In accordance with the lease terms, AWL paid $$12,000,$ which represented the first six months$$ rent in advance.

$13$ A major hotel contacted AWL about supplying it with an $8-$metre saltwater aquarium for the lobby. AWL agreed to this and received a $$45,000$ payment from the hotel. AWL ordered the tank the same day and it was scheduled to arrive on February $25.$ AWL has guaranteed that it will be installed before the end of February.

$14$ AWL paid its employees $$11,000$ for wages earned during the first two weeks of January.

$15$ AWL$$s board of directors declared dividends in the amount of $$20,000,$ which will be paid on February $15.$

$19$ AWL made sales totalling $$62,000.$ Of this, half was cash and the balance was on account. The cost to AWL of the products sold was $$39,000.$

Adjusting entries:

Jan. $31$ The company recorded the $$11,000$ in wages earned by employees during the last two weeks of the month. These wages will be paid on February $1,2020.$

$31$ AWL recorded the adjusting entry to depreciate the new computer equipment.

$31$ AWL recorded the adjusting entry for the warehouse lease.

Prepare the journal entries and adjusting entries for the above transactions. $($Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts.$)$

Date

Account Titles and Explanation

Debit

Credit

Choose a transaction date.

Enter an account title to record purchase of equipment.

Enter a debit amount.

Enter a credit amount.

Enter an account title to record purchase of equipment.

Enter a debit amount.

Enter a credit amount.

$($To record purchase of equipment$)$

Choose a transaction date.

Enter an account title to record payment of rent.

Enter a debit amount.

Enter a credit amount.

Enter an account title to record payment of rent.

Enter a debit amount.

Enter a credit amount.

$($To record payment of rent$)$

Choose a transaction date.

Enter an account title.

Enter a debit amount.

Enter a credit amount.

Enter an account title.

Enter a debit amount.

Enter a credit amount.

Choose a transaction date.

Enter an account title.

Enter a debit amount.

Enter a credit amount.

Enter an account title.

Enter a debit amount.

Enter a credit amount.

Choose a transaction date.

Enter an account title.

Enter a debit amount.

Enter a credit amount.

Enter an account title.

Enter a debit amount.

Enter a credit amount.

Jan. $19$

Enter an account title to record sale of goods on January $19.$

Enter a debit amount.

Enter a credit amount.

Enter an account title to record sale of goods on January $19.$

Enter a debit amount.

Enter a credit amount.

Enter an account title to record sale of goods on January $19.$

Enter a debit amount.

Enter a credit amount.

$($To record sale of goods$)$

Enter an account title to record the cost on January $19.$

Enter a debit amount.

Enter a credit amount.

Enter an account title to record the cost on January $19.$

Enter a debit amount.

Enter a credit amount.

$($To record the cost$)$

Adjusting entries:

Choose a transaction date.

Enter an account title to record wages earned by employees.

Enter a debit amount.

Enter a credit amount.

Enter an account title to record wages earned by employees.

Enter a debit amount.

Enter a credit amount.

$($To record wages earned by employees$)$

Choose a transaction date.

Enter an account title to record depreciation.

Enter a debit amount.

Enter a credit amount.

Enter an account title to record depreciation.

Enter a debit amount.

Enter a credit amount.

$($To record depreciation$)$

Choose a transaction date.

Enter an account title to record warehouse lease.

Enter a debit amount.

Enter a credit amount.

Enter an account title to record warehouse lease.

Enter a debit amount.

Enter a credit amount.

$($To record warehouse lease$)$

Answer rating: 100% (QA)

Here are the journal entries and adjusting entries for the transactions of Aquarium World ... View the full answer