During February 20x2, Davis Consulting completed the following transactions: 1 Feb 1 Completed a consulting engagement...

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During February 20x2, Davis Consulting completed the following transactions: 1 Feb 1 Completed a consulting engagement and received cash of $8.500. Davis Consulting wants to expand operations but needs to borrow $300,000 15 accomplish this goal. Davis consults with the bank and secures a 10%, five-year note an February 1, 20x2. Davis must pay the bank principal in five equal principal installments plus interest annually on February 1 for the next five years. Davis Consulting, Inc. incorporated end of January 20x2. Mr. Davis used the balance in his owner's equity account to purchase his corporate stock. Hint: to show this purchase of Mr. Davis's 20,000 shares of common stock, you need to debit owner's equity for the appropriate balance as of January 31, 200x2 and credit common stock. 1 NOTE: Assume total stockholders' equity is $27,709 and includes 20,000 shares of common stock and 0 shares of preferred stock issued and outstanding immediately before the previously described transactions. This is Mr. Davis' stock purchased. 1 2 9 12 12 19 19 The company wants to raise additional capital for the planned business expansion by issuing 20,000 additional $1 par value common shares for $40,000 and by issuing 3,000, 6%, $80 par preferred shares at $100 per share. Total common shares authorized is 100,000 and total preferred shares authorized is 10,000. 29 Purchased office supplies on account. $600. Purchased 60 units software inventory on account from Mraz Co., $1,500 (including freight). Paid utilities expenses of $325 for the month, Cx 211. Sold 50 software units on account to James Williams, $4,500. Consulted with a client, Joseph Smith, for a fee of $500 for cash. Paid employee salaries, $2,055, Ck 212. Hint: Watch how much is expense for February and was already expensed in January. Paid on account $7,000, CK 213. Received telephone bill and paid for $300, CK 214. Collected $3,000 on account. 22 22 23 26 27 Record the following adjusting entries: Sold 150 units software for cash for $13.125. Purchased 40 units software inventory on account from Mraz Co., $1,000. a. Accrued salaries expense $587.14. b. Office supplies on hand, $125. c. Expiration of prepaid rent $475. d. Earned balance of Unearned revenue. e. Davis has decided to adjust the useful tives for the equipment purchased 12/3/X1 for $2,700 (a computer) and the office furniture purchased 12/4/X1 for $3,900. After consideration, the computer is estimated to last three (3) years instead of the original five (5) and have a saivage value of $50. The furniture is estimated to last ten (10) years and have a salvage value of $20. Calculate the amount of depreciation expense for each for the month ended February 28, 20X2 assuming the company uses the double- declining-balance method for the computer and the straight-line method for the office fumiture NOTE: This is a change in the calculation of the depreciation so you have to determine the book value at the time of the change and recalculate the depreciation for the balance of the period. f. Physical inventory showed a total of 42 units of software Inventory on hand. & Record the accrued interest on February 28, 20x2. h. Bad debt-Davis Consulting uses the allowance method for receivables, estimating uncollectibles to be 5% of February credit sales of $4,500. L. Current portion of long term debt (show the adjustment for the current portion of the note to be paid within the next year). Requirements: 1. Prepare perpetual inventory records for February for Davis using the LIFO inventory costing method. (NOTE: Continue from the information from the January inventory worksheet.) 2. Journalize all the entries above except the adjusting entries 3. Post your entries in your ledgers. 4. Prepare the February bank reconciliation using the following Bank Statement. Bank Statement for February 29, 20x2 Beginning Balance, January 31,20x2 Deposits and other Credits: Feb. 1 Feb. 1 Feb. 2 Feb. 20 (EFT Tippy Tom-a customer) Feb. 20 Feb. 23 Feb. 28 (Interest credit) Checks and other Debits: Feb. 1 (Ck #206) Feb. 1 (Ck #210) Feb. 2 (EFT to Paper Products) Feb. 19 (Ck #211) Feb. 21 (Ck #212) Feb. 25 (Ck #213) Feb. 28 (EFT to The Cable Co.) Bank Service Charge Ending Balance, February 29, 20x2 6,000 1,500 648,500 600 500 3,000 20 2,375 3,900 25 325 2,055 7,000 75 15 21,853 660,120 15,770 666,203 5. Journalize and post any transactions required from the bank reconciliation. 6. Journalize and post the adjusting entries. 7. Prepare financial statements. a. Multi-step invoice statement using the format required for January. b. Statement of Retained Earnings c. Classified Balance Sheet 8. Journalize and post the closing entries. 9. Prepare the additional information for #7 and #8 below. Submit for Grading: 1. Your books with the complete set of journals showing December through February. 2. Your books with the 4-column ledgers showing December through February. 3. Inventory Worksheet 4. Bank Reconciliation 5. Set of financial statements as of February 28, 20X2 as listed in #7 above. 6. Post-closing trial balance. 7. Show the calculations and total loan payment as of February 1, 20X2 in the Notes section of your books. 8. Davis identified on March 15 that a customer is not going to pay his receivable of $200. Show the entry to record the write-off of the customer's bad debt on March 15, 20X2 in the Notes section of you records. Do not record the March 15 bad debt in your journals or post in your ledgers. During February 20x2, Davis Consulting completed the following transactions: 1 Feb 1 Completed a consulting engagement and received cash of $8.500. Davis Consulting wants to expand operations but needs to borrow $300,000 15 accomplish this goal. Davis consults with the bank and secures a 10%, five-year note an February 1, 20x2. Davis must pay the bank principal in five equal principal installments plus interest annually on February 1 for the next five years. Davis Consulting, Inc. incorporated end of January 20x2. Mr. Davis used the balance in his owner's equity account to purchase his corporate stock. Hint: to show this purchase of Mr. Davis's 20,000 shares of common stock, you need to debit owner's equity for the appropriate balance as of January 31, 200x2 and credit common stock. 1 NOTE: Assume total stockholders' equity is $27,709 and includes 20,000 shares of common stock and 0 shares of preferred stock issued and outstanding immediately before the previously described transactions. This is Mr. Davis' stock purchased. 1 2 9 12 12 19 19 The company wants to raise additional capital for the planned business expansion by issuing 20,000 additional $1 par value common shares for $40,000 and by issuing 3,000, 6%, $80 par preferred shares at $100 per share. Total common shares authorized is 100,000 and total preferred shares authorized is 10,000. 29 Purchased office supplies on account. $600. Purchased 60 units software inventory on account from Mraz Co., $1,500 (including freight). Paid utilities expenses of $325 for the month, Cx 211. Sold 50 software units on account to James Williams, $4,500. Consulted with a client, Joseph Smith, for a fee of $500 for cash. Paid employee salaries, $2,055, Ck 212. Hint: Watch how much is expense for February and was already expensed in January. Paid on account $7,000, CK 213. Received telephone bill and paid for $300, CK 214. Collected $3,000 on account. 22 22 23 26 27 Record the following adjusting entries: Sold 150 units software for cash for $13.125. Purchased 40 units software inventory on account from Mraz Co., $1,000. a. Accrued salaries expense $587.14. b. Office supplies on hand, $125. c. Expiration of prepaid rent $475. d. Earned balance of Unearned revenue. e. Davis has decided to adjust the useful tives for the equipment purchased 12/3/X1 for $2,700 (a computer) and the office furniture purchased 12/4/X1 for $3,900. After consideration, the computer is estimated to last three (3) years instead of the original five (5) and have a saivage value of $50. The furniture is estimated to last ten (10) years and have a salvage value of $20. Calculate the amount of depreciation expense for each for the month ended February 28, 20X2 assuming the company uses the double- declining-balance method for the computer and the straight-line method for the office fumiture NOTE: This is a change in the calculation of the depreciation so you have to determine the book value at the time of the change and recalculate the depreciation for the balance of the period. f. Physical inventory showed a total of 42 units of software Inventory on hand. & Record the accrued interest on February 28, 20x2. h. Bad debt-Davis Consulting uses the allowance method for receivables, estimating uncollectibles to be 5% of February credit sales of $4,500. L. Current portion of long term debt (show the adjustment for the current portion of the note to be paid within the next year). Requirements: 1. Prepare perpetual inventory records for February for Davis using the LIFO inventory costing method. (NOTE: Continue from the information from the January inventory worksheet.) 2. Journalize all the entries above except the adjusting entries 3. Post your entries in your ledgers. 4. Prepare the February bank reconciliation using the following Bank Statement. Bank Statement for February 29, 20x2 Beginning Balance, January 31,20x2 Deposits and other Credits: Feb. 1 Feb. 1 Feb. 2 Feb. 20 (EFT Tippy Tom-a customer) Feb. 20 Feb. 23 Feb. 28 (Interest credit) Checks and other Debits: Feb. 1 (Ck #206) Feb. 1 (Ck #210) Feb. 2 (EFT to Paper Products) Feb. 19 (Ck #211) Feb. 21 (Ck #212) Feb. 25 (Ck #213) Feb. 28 (EFT to The Cable Co.) Bank Service Charge Ending Balance, February 29, 20x2 6,000 1,500 648,500 600 500 3,000 20 2,375 3,900 25 325 2,055 7,000 75 15 21,853 660,120 15,770 666,203 5. Journalize and post any transactions required from the bank reconciliation. 6. Journalize and post the adjusting entries. 7. Prepare financial statements. a. Multi-step invoice statement using the format required for January. b. Statement of Retained Earnings c. Classified Balance Sheet 8. Journalize and post the closing entries. 9. Prepare the additional information for #7 and #8 below. Submit for Grading: 1. Your books with the complete set of journals showing December through February. 2. Your books with the 4-column ledgers showing December through February. 3. Inventory Worksheet 4. Bank Reconciliation 5. Set of financial statements as of February 28, 20X2 as listed in #7 above. 6. Post-closing trial balance. 7. Show the calculations and total loan payment as of February 1, 20X2 in the Notes section of your books. 8. Davis identified on March 15 that a customer is not going to pay his receivable of $200. Show the entry to record the write-off of the customer's bad debt on March 15, 20X2 in the Notes section of you records. Do not record the March 15 bad debt in your journals or post in your ledgers.

Answer rating: 100% (QA)

Here are the journal entries ledgers worksheets and financial statements for Davis Consulting for February 2022 Journal Entries Feb 1 Cash58500Consulting Revenue Feb 1 Notes Payable300000Notes Payable ... View the full answer