Solution to Practice question on Journal Entries PDF

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Comm 457 Solution to Practice Question on Journal Entries P2-34 (Transaction analysis) ** 1.

Cash Common Shares

375,000 375,000

(25,000*15)

2.

3.

Land (20%) Building (80%) Cash Common Shares Amortization expense Accumulated Amortization Building

85,000 340,000 50,000 375,000 10,000 10,000

(340,000-40,000)/30 years 4.

5.

Cash Unearned rental revenue Rental revenue Unearned relates to Jan, Feb, & Mar 2007 Equipment Cash Notes Payable Interest expense Interest payable

20,000 5,000 15,000

100,000 50,000 50,000 2,500 2,500

50,000*0.10*6/12

© Scott M. Sinclair, FCA 2013

1

Comm 457 Solution to Practice Question on Journal Entries continued 6.

Amortization expense Accumulated Amortization- equipment

5,000 5,000

(100,000-0)/10*6/12

7

8.

9.

10.

11.

12

13.

Inventory Accounts payable

200,000

Cash Accounts receivable Sales

50,000 175,000

Cost of goods sold Inventory

160,000

Accounts payable Cash

175,000

Cash Accounts receivable

165,000

Operating expenses Cash Income tax expense Cash Income taxes payable Revenue =225,000+15,000 = 240,000 Expenses 2,500+10,000+5,000+160,000+30,000=207,500 Income before tax =240,000-207,500=32,500 Income tax expense 32,500 *.030=9,750

© Scott M. Sinclair, FCA 2013

200,000

225,000

160,000

175,000

165,000 30,000 30,000 9,750 3,000 6,750

2

Comm 457 14.

Dividends declared/Retained Earnings Cash Dividends payable

4,000 3,000 1,000

** Question taken from Financial Accounting, A User Perspective, Fourth Canadian Edition, Hoskin, Fizzell and Cherry, John Wiley & Sons Canada Ltd., 2006

© Scott M. Sinclair, FCA 2013

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