CFRHW1 Sol - Journal Entries - 1.) PPE 120,000 Cash 60,000...

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Journal Entries --------------- 1.) PPE 120,000 Cash 60,000 N/P 60,000 (They could also have split the transaction into a building and an equipment purchase, or done something similar. Or they could have done something like this: PPE 60,000 Cash 60,000 PPE 60,000 N/P 60,000) 2.) Prepaid Insurance 1,200 Cash 1,200 3.) Inventory 320,000 Cash 270,000 A/P 50,000 (Or they could have done something like this: Inventory 320,000 A/P 320,000 A/P 270,000 Cash 270,000) 4.) Cash 80,000 A/R 430,000 Sales Revenue 510,000 Cash 360,000 A/R 360,000 (Or something like this: A/R 70,000 Sales 70,000 Cash 440,000 Sales 440,000) 5.) Salary expense 80,000 Cash 80,000 6.) Utilities Expense 1,300 Cash 1,300 7.) Cash 600 Unearned Revenue 600 8.) N/R 1,000 A/R 1,000 9.) Cash 900 Unearned Revenue 900 10.) Dividend 25,000 Dividend Payable 25,000 Adjusting Entries ----------------- 1.) Depreciation on the building is $80,000 / 20 years = $4,000/year Depreciation on the equipment is ($40,000 - $5,000 salvage value) / 7 years = $5,000/year So the depreciation entry is Depreciation Expense 9,000
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Accumulated Depr. 9,000 (Note: If they credited PPE instead, that's because they don't remember contra-accounts and adjunct accounts. So let
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CFRHW1 Sol - Journal Entries - 1.) PPE 120,000 Cash 60,000...

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