Week-1 Basic Journal Entries
Mason Yachts, a boat manufacturing company, begins business on 1/1/2017. Mason specializes in selling and repairing yachts. A listing of all of Mason trial balance accounts can be found in “trial balance” tab below. For the transactions below, please record the necessary journal entries in the “Journal Entries” tab and update the balances in the trial balance. I have provided a “T-Account” tab for each individual trial balance account to track the changes during the period.
Transaction #1 On January 1, 2017, Ted Mason invest $300,000 in exchange of 2,000 shares of $1 par Common Stock.
Transaction #2 On January 1, 2017, Mason Yachts buys $8,000 worth of office supplies with cash.
Transaction #3 On January 1, 2017, Mason Yachts pre-Pays the following expenses for the next 12 months: Rent Expense $9,000 and Insurance Expense $4,800
Transaction #4 On January 1, 2017 Mason Yachts buys $39,600 worth of machines that will be used in modifying boats that will be sold. Mason noted that these machines will have useful life of 6 years and no salvage value at the end of the 6 years. Mason will use the straight-line depreciation method in depreciating the asset. Mason bought these machines with cash.
Transaction #5 On January 1, 2017 Mason Yachts hires three employees: John Mason, Office Manager, Frank Mason, Repairs Manager, and McCoy Mason, Sales Manager. Each of the three employees will have a monthly salary of $6,000, which will be paid on the 5th day of the next month.
Transaction #6 On January 2nd, Ozark Boats pre-pays Mason Yachts $54,000 to perform repair services on 6 boats. For each boat repaired, Mason Yacht will receive $9,000 in revenue.
Transaction #7 On January 2nd, John Mason purchased 6 Boats for $12,000 each at the boat action. These boats are ready re-sale and were put into inventory on this date. Ted purchased these boats on account and will be paid in 90 days.
Transaction #8 On January 15th, Mason Yachts sold 3 Boats for $21,000 each to a customer. The customer will pay in cash for these boats in 30 days. (Hint: Remember there are two entries with a sale of goods)
Transaction #9 On January 30th, Mason Yachts announcee that is has declared and paid a dividend of $1 to all shares of common stock.
Week-2 Adjusting Journal Entries and Income Statement
At the end of the month, Mason needs to make the following adjusting journal entries. Please record these adjusting journal entries in the “journal entries”, “T-Accounts”, and “Trial Balance” tabs and prepare a single-step and multiple step income statement in the “Income Statement” tab.
Transaction #10 : One month of expenses has been incurred for rent and insurance expenses.
Transaction #11: John, Frank, and McCoy Mason worked for a full-month as salary employees. They will be paid on February 5th.
Transaction #12: At then end of the month, John Mason does an inventory of the supplies room and notes that $3,725 worth of supplies is still remaining in the stock room.
Transaction #13: One month of depreciation has been incurred as of Janary 31st on the machines purchased. Record the applicable entry.
Transaction #14: As of January 31st, Mason Yachts has completed repair services on 3 of the 6 Ozark Boats. Based on the terms of the agreement Mason may record revenue.
Transaction #15: McCoy Mason has noted that the customer that purchased the two boats on account is in financial trouble and collectiablity may or may not occur. Based on discussions with the customer, Mason expects to receive 90% of the puchase price of the boats on account. As such, Mason has decided to reserve for the 10% in an allowance account and will not completely write-off the accounts receivable.
Transaction #16: After review of the bank statement at month-end, you note that $100 of interest income was earned and wired into cash account at First Hawaiian Bank for interest related to our account balance for the month of January.
Prepare Single Step and Multiple Step Income Statements on the “Income Statement” tab for the month of January. Assume no income tax.