Create a list of journal entries, adjusting entries and closing entries for below
Note: Round to the nearest dollar on all calculations before doing the journal entries.
Check Figure: Total Assets on March 31, 2014 should be$33,407,196.
Dude Duds, Inc
December 31, 2013
Dude Duds, IncTransaction ListFirst Quarter 2014
- Issued 360,000 shares of $1 par value common stock for $2,250,000on Jan 1.
- Dude Duds received $500,000when the company signed a promissory note with First Bank on Jan 2. Principle on the 0% note is due at the end of 12 years.
- Paid employee salaries and wages that were earned but remained unpaid at the end of last year on Jan 3.
- Collected the net balance of accounts receivable that were owed by customers at the beginning of the year.
- Paid for purchases made last year on account that remained unpaid at the beginning of the year.
- Acquired merchandise valued at $8,550,966on account.
- Acquired display fixtures with a list price of $481,400on Jan 7. Paid for fixtures on account. The company expects the fixtures to have a useful life of 10 years and a salvage value of $48,140.
- Paid for freight charges and set-up of the display fixtures, $963.
- Discovered defective merchandise with a list price of $34,204. Returned the merchandise to the supplier. Merchandise was originally purchased on account and the supplier agreed to credit the account.
- Obtained building and liability insurance coverage from Northwest Insurance Company. The two-year policy began on Feb 1 and has a premium of $54,000. The previous 2-year premium was $52,800.
- Paid $5,130,579of merchandise invoices. The company deducted a 2% discount for prompt payment and treated the discount as a reduction in the acquisition cost of the inventory.
- Received an order from a customer for $158,727. The company expects to receive the merchandise from a supplier next month. The customer advanced $31,700 toward the contract price.
- Acquired new warehouse shelving costing $240,723on Feb 1. Dude Duds made a down payment of $84,253and assumed a 10-year, 3.5% mortgage for the balance. The company expects the shelving to have a useful life of 5 years and a salvage value of $12,000 .
- The firm purchased 100,000 shares of $1 par value common stock of ManMade Corporation for $1,996,040. This purchase is a short-term investment of excess cash. ManMade Corp stock trades on the NYSE.
- Signed a contract for rental of office space beginning April 1. Paid rental for one year of $420,000in advance. The rental payment is the same as last year.
- Sold merchandise with an original cost of $10,077,924for $17,636,367during the quarter. Of the total sales, 50% was for cash and the remainder was on account.
- Collected 75% of the sales made on account during this quarter.
- Employees earned $2,779,283in salaries and wages during this quarter, of which the company paid $2,084,462.
- Paid advertising and other selling expenses of $45,351.
- Paid all first quarter utility bills which totaled $50,390.
- Received dividends of $65,000from MadMade Corporation. Record as Investment Revenue.
- Declared and paid cash dividends of $0.25 per share to stockholders of record Feb. 28.
- Posted adjusting entries to correctly report current period expenses previously paid in advance.
- Depreciation on equipment & buildings purchased in prior periods was$47,497. The company uses the nearest full month to calculate depreciation expense on new purchases.
- Paid off $14,250 of notes. Interest accrued on all long-term debt was$9,640.
- Paid first quarter of income taxes. Dude Duds, Inc corporate tax rate is 15% on income before taxes.