Question 1:

Adel Company
General Journal

Date Explanation Debit Credit

Jan. 10 Account Receivable $28,000
Sales Revenue $28,000
Cost of goods sold $16,500
Inventory $16,500

Feb. 13 Cash $10,000

Account Receivable $20,000
Sales Revenue (Casty) $30,000

Cost of goods sold $17,600

Inventory $17,600

Feb. 23 Cash ($20,000 - $400) $19,600

Sales discount ($20,000 x 2%) $400
Account Receivable $20,000

May. 21 Cash $28,000

Account Receivable $28,000

Oct. 1 Note Receivable $6,000

Cash $6,000
Nov. 9 Allowance for Doubtful Account $3,600
Account Receivable $3,600

Dec. 31 Bad Debt Expense $20,125

Allowance for Doubtful Account $20,125
($22,000 - $1,875)
Dec. 31 Warranty Liability $12,000
Repair Parts $12,000
Warranty Expense $6,000
Warranty Liability $6,000
($30 x 600 - $12,000)

Dec. 31 Interest Receivable $180

Interest Revenue $180
($6,000 x 12% x 3/12)
2021 Cash $6,240
Jan. 1 Note Receivable $6,000
Interest Revenue ($6,000 x 12% x 4/12) $240

Elora Company
General Journal

Date Explanation Debit Credit

Oct. 1 Cash $6,000
Note Payable $6,000

Jan. 1 Note Payable $6,000

2021 Interest Payable ($6,000 x 12% x 4/12) $240
Cash $6,240

Question 2:
King&Queen Co.
General Jounal

Date Explanation Debit Credit

Jan. 7 Equipment (Truck) $45,600
2019 Cash $45,600

Feb. 27 Repair Expense $130

Cash $130

Dec. 31 Depreciation Expense $11,400

Accumulated Depreciation $11,400
($45,600 x 25%)
(Straight-line rate is 12.5%  Double-declining rate is
25%)

2020 Natural Resources $80,000,000

Jan. 8 Cash $80,000,000

Feb. 1 Equipment (Truck) $75,000

Cash $75,000

Mar. 13 Repair Expense $200

Cash $200

Apr. 30 Cash $30,000

Accumulated Depreciation $14,250
(book value at beginning of year: $45,600 - $11,400 =
$34,200)
($34,200 x 25% x4/12 + $11,400)
Loss on disposal of Plant Assets $1,350
Equipment ($45,600 - $14,250 = $31,350) $0

Dec. 31 Depreciation Expense

Accumulated Depreciation

Adel Co. is a company in the industry of selling and installing home and business security
systems, in which company. Adel choose financial period ending by December 31. The
following were selected from among the transactions completed during 2020.
 
2020
Jan   10      Sold merchandise on account to Bling, $28,000. The cost of the
merchandise sold was $16,500.
 Feb  13      Sold $30,000 merchandise to Casty, receive $10,000 in cash this day and the rest
would follow Adel’s credit policy of 2/10, n/30. The cost of merchandise sold
was $17,600.
Feb  23      Received payment from Casty.
May 21      Received $28,000 on account from Danford for the sales of last year.
Oct    1      Received a $6,000, 12%, 4 month note, in settlement of the account of Elora
Nov  9       Wrote off the $3,600 balance owed by Frenex which has no assets.
Dec 31       Based on an analysis of the $160,750 of accounts receivable, it was estimated
that $22,000 will be uncollectible, given the balance of the account Allowance
for doubtful accounts before adjustment is $1,875. Journalize this adjusting
entry.
Dec 31       During 2020, Adel Co. offered sales of 12,000 security devices with one-year
warranty-on-part policy. A provision was made by Adel Co., based on the
management’s experience, 600 units (5%) will be defective and that warranty
repair costs will average $30 per unit. In 2020, warranty contracts on 400
units were honored, at a total cost of $12,000. Journalize the repair costs
incurred in 2020 to honor warranty contracts on this year sales and adjusting
entry at December 31 for the remaining amount after it adjusts for $12,000
of warranty claims honored during the year.
Dec 31       Provide any necessary adjustment related to interest in order to provide
accurate information for Financial Statement.
2021
Jan    1       Received payment from company Elora.
 
Requirements:
1. Journalise these transactions into the book of Adel Co. (Show calculation!)
2. Journalise related transactions into the book of company Elora. (Show calculation!)
 
 
Question 2:
The following transactions, were completed by King &Queen Co. during a two-year period.
The double-declining-balance method of depreciation is used for plant assets and units-of-
activity is used for natural resources.

2019
Jan. 7. Purchased a delivery truck for $45,600, paying cash.
Feb. 27. Paid the repair and maintenance center $130 for changing the oil, replacing the oil
filter, and tuning the engine on the delivery truck.
Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of
the truck is eight years, with a residual value of $10,000 for the truck
 
2020
Jan. 8. Invested $80 million in a mine estimated to have 10 million tons of coal and no
residual value.

 
Feb. 1. Purchased a new truck to deliver coal from the mine to the warehouse for $75,000,
paying cash.
Mar. 13. Paid the repair and maintenance center $200 to tune the engine and make other
minor repairs on the truck purchased in 2019.
Apr. 30. Sold the truck purchased in 2019 for $30,000. (Record depreciation to date in 2009
for the truck.)
Dec. 31. Recorded depreciation for the new truck. It has an estimated trade-in value of
$13,500 and an estimated life of 10 years.
Dec. 31 In the first year, King & Queen extracted and sold 320,000 tons of coal. Recorded the
depletion for the first year.
  
Requirements:
Journalize these transactions to the book of King& Queen Co. for 2 years 2019 and 2020.
(Show calculation!)

Sept. 1    Summer Company purchased merchandise for $95,000 on account from

Tony Company, terms n/30.
Sept. 9.         Received 35% of the $9,000 balance owed by Kovar Co., a bankrupt
business, and wrote off the remainder as uncollectible.
          Sept. 18       Reinstated the account of Spencer Clark, which had been written off in the
                              preceding year as uncollectible. Journalized the receipt of $4,000 cash in full
                              payment of Clark’s account.
          Sept. 25       Wrote off the $11,850 balance owed by Iron Horse Co., which has no assets.
 
Oct.   1        Summer Company issued a 90-day, 8% note for $95,000 on account.
 
 Oct. 10       Sold $40,000 merchandise to Winny, receive $15,000 in cash this day
and the rest would follow Summer’s credit policy of 2/10, n/30. The
cost of merchandise sold was $22,900
 
 Oct 20      Received payment from Winny.
.
           Nov. 1       Received a $8,000, 12%, 3 month note, in settlement of the account of John.
 
 Dec. 31      Summer Company paid the amount due.
 
 Dec. 31     Make necessary adjustment related to interest before preparing Financial
Statement.

Cost of goods available for sale

Date Explanation Units Unit cost Total cost
 Ending inventory
Date Units Unit cost Total cost

Cost of good sold

Cost of goods available for sale:
Less: Ending inventory:
Cost of good sold:

Condensed Income Statement

FIFO LIFO Average-cost

CHAP 10
Straight-line method
Year Depreciable Depreciation Annual Accumulated Book Value
Cost rate Depreciation Depreciation
Expense
Units-of-activity method
Year Units of Activity Depreciable Annual Accumulated Book Value
cost/unit Depreciation Depreciation
Expense

Declining-balance method
Year Book Value Depreciation Annual Accumulated Book Value
Beginning of rate Depreciation Depreciation
Year Expense

CHAP 11
Partial Balance Sheet
Current liabilities
Notes payable
Accounts payable
Unearned revenue
Salaries and wages payable
Warranty liability
Current maturities of long-term debt
Total current liabilities

CHAP 10