How are these transactions logged as journal entries? Luis and Linda Smith formed a company to provide
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How are these transactions logged as journal entries?
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Luis and Linda Smith formed a company to provide consulting services to assist clients in preparation of financing and zoning approval applications. In addition, they will sell a newsletter including construction and demographic data and analysis. They initially invest $50,000 in the business. The business is operating in a state that has no income tax or sales tax. The business is subject to a federal tax at an estimated rate of 30%. Below is a list of transactions for the first month of operations. Use an accounting system to record the transactions and to prepare financial statements for the end of the first month. • • January 1, 202x. Initial capitalization of company through the sale of 100 shares of no par value common stock to Luis and Linda for $50,000. January 2, 202x. Payment of $6,000 to landlord for office space. $3,000 represents a refundable deposit and $3,000 represents the first month's rent. The lease is a 3-year lease. • January 2, 202x. Purchase of a personal liability insurance policy. The policy is for two- years and the premium paid is $4,800. • January 2, 202x. Purchase of office furniture and equipment for $14,400. The equipment has an estimated life of three years with no salvage value. • January 2, 202x. Purchased $100 supplies on account. Payment is due on February 2. January 2, 202x. Spent $1,000 cash for advertising. • • January 3, 202x. Attend trade fair and sell 20 one-year subscriptions for 12 monthly issues of the newsletter. The price per subscription is $120. All subscribers pay cash. The Smiths also provide marketing materials to numerous prospects for their consulting services. • January 23, 202x. Hire part-time office assistant to begin next week. Wages will be $250 per week paid on the 1st and 15th of each month. The assistant was hired through an agency that handles all payroll taxes. • January 30, 202x (Monday). Newly hired office assistant arrives for first day of work. January 31, 202x. Pay utilities and telephone bills. Total $200. • • January 31, 202x. During January, the Smiths have consulted with 15 different clients. On January 31, their assistant prepares and mails invoices for a total of $6,000 for professional services. Based on discussions with a banker and an accountant, they estimate that 5% of these billings will be uncollectible. • January 31, 202x. Adjustments include: depreciation, insurance, 2 days wages, supplies, and taxes. An inventory of the supply room indicates that the approximately $50 of supplies remain. Luis and Linda Smith formed a company to provide consulting services to assist clients in preparation of financing and zoning approval applications. In addition, they will sell a newsletter including construction and demographic data and analysis. They initially invest $50,000 in the business. The business is operating in a state that has no income tax or sales tax. The business is subject to a federal tax at an estimated rate of 30%. Below is a list of transactions for the first month of operations. Use an accounting system to record the transactions and to prepare financial statements for the end of the first month. • • January 1, 202x. Initial capitalization of company through the sale of 100 shares of no par value common stock to Luis and Linda for $50,000. January 2, 202x. Payment of $6,000 to landlord for office space. $3,000 represents a refundable deposit and $3,000 represents the first month's rent. The lease is a 3-year lease. • January 2, 202x. Purchase of a personal liability insurance policy. The policy is for two- years and the premium paid is $4,800. • January 2, 202x. Purchase of office furniture and equipment for $14,400. The equipment has an estimated life of three years with no salvage value. • January 2, 202x. Purchased $100 supplies on account. Payment is due on February 2. January 2, 202x. Spent $1,000 cash for advertising. • • January 3, 202x. Attend trade fair and sell 20 one-year subscriptions for 12 monthly issues of the newsletter. The price per subscription is $120. All subscribers pay cash. The Smiths also provide marketing materials to numerous prospects for their consulting services. • January 23, 202x. Hire part-time office assistant to begin next week. Wages will be $250 per week paid on the 1st and 15th of each month. The assistant was hired through an agency that handles all payroll taxes. • January 30, 202x (Monday). Newly hired office assistant arrives for first day of work. January 31, 202x. Pay utilities and telephone bills. Total $200. • • January 31, 202x. During January, the Smiths have consulted with 15 different clients. On January 31, their assistant prepares and mails invoices for a total of $6,000 for professional services. Based on discussions with a banker and an accountant, they estimate that 5% of these billings will be uncollectible. • January 31, 202x. Adjustments include: depreciation, insurance, 2 days wages, supplies, and taxes. An inventory of the supply room indicates that the approximately $50 of supplies remain.
Expert Answer:
Answer rating: 100% (QA)
January 1 202x Initial Capitalization of Company Debit Cash 50000 Credit Common Stock 50000 January 2 202x Payment of 6000 to landlord Debit Rent Expe... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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