July 2 jacques gave his personal items as store

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July 2 Jacques gave his personal items as store display in the restaurant in exchange for 5,000 common shares. The personal items (including gloves, autographed pictures etc.) were acquired by Jacques free of charge but it has a market value of $2,000. July 2 The Company borrowed $30,000 from Crescent Bank by issuing a $20,000 note with interest and principal due in two years at an annual simple interest rate of 10%, and a $10,000 note with interest and principal due in three years at an annual simple interest rate of 8%. July 2 Purchased assets from De Maisonneuve Corp for $72,000 cash. The assets included food inventory for the restaurant of $50,000, supplies of $6,000 and used equipment of $16,000. The company recorded the $50,000 as beginning inventory. The equipment is expected to have a useful life of only 2 years with salvage value of $2,000 and the company plans to use straight-line amortization to amortize the equipment. July 31 The restaurant made $50,000 in its first four weeks of business. 50% of customers pays on credit and the rest pays with cash. REQUIRED: A. Prepare journal entries for NILTOWN for the above transactions (10 marks). B. Prepare the adjusting entries for the month of July for the bank note and for the equipment (5 marks).
July 2 Cash 30,000 Notes Payable 30,000 July 2 Inventory 50,000 Supplies 6,000 Equipment 16,000 Cash 72,000 July 31 Cash 25,000 Accounts Receivable 25,000 Food Revenue 50,000 July 31 Interest Expense 20000*10%*1/12+10000*8%*1/12 233.33 Interest Payable 233.33 July 31 Depreciation Expense Equipment (16000-2000)/24 583.33 Accum Depr Equipment 583.33
QUESTION 8 The bookkeeper of Dan & Dean Fashion Company had prepared the following unadjusted balance sheet as of December 31, 2008: Balance Sheet Cash $70,000 Accounts payable $45,000 Accounts receivable (net) 40,000 Notes payable 65,000 Inventories 60,000 Common Shares 200,000 Equipment (net) 88,000 Retained Earnings 90,000 Land 120,000 $400,000 Trademarks 22,000 $400,000 Additional information was as follows: 1. Net accounts receivable includes a debit balance of $48,000, a credit balance of $5,000 and allowance for doubtful accounts of $3,000. 2. Equipment has a useful life of 10 years with no salvage value. The company has used the equipment for 2 years and depreciates it using the straight-line method. 3. The trademarks have an indefinite useful life and are not impaired at year end. 4. The bookkeeper forgot to journalize the purchase of two short-term investments. The first investment was for marketable securities bought with cash on August 20, 2008 at a cost of $8,000. The company did not intend to hold the securities until their maturity nor did they plan to actively trade them (i.e., the plan was to sell the securities in 2 years). As of December 31, 2008, the market value was $3,000 and it was the first time the company had bought such securities for resale. The second investment was for stock options (i.e. derivatives) bought with cash on January 18, 2008 at a cost of $2,000. The company held the options until they expired unexercised on July 18, 2008 when they became worthless.

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