Question

Whispering Winds Company’s trial balance at December 31, 2019, is presented below. All 2019 transactions have been recorded except for the items described following the trial balance.

	Debit		Credit
Cash	$28,000
Accounts Receivable	37,000
Notes Receivable	9,900
Interest Receivable	–0–
Inventory	36,400
Prepaid Insurance	3,720
Land	21,300
Buildings	156,000
Equipment	57,000
Patents	10,100
Allowance for Doubtful Accounts			$450
Accumulated Depreciation—Buildings			52,000
Accumulated Depreciation—Equipment			22,800
Accounts Payable			27,500
Salaries and Wages Payable			–0–
Unearned Rent Revenue			3,600
Notes Payable (due in 2020)			12,000
Interest Payable			–0–
Notes Payable (due after 2020)			36,000
Common Stock			53,500
Retained Earnings			58,570
Dividends	14,000
Sales Revenue			905,000
Interest Revenue			–0–
Rent Revenue			–0–
Gain on Disposal of Plant Assets			–0–
Bad Debts Expense	–0–
Cost of Goods Sold	637,000
Depreciation Expense	–0–
Insurance Expense	–0–
Interest Expense	–0–
Other Operating Expenses	61,000
Amortization Expense	–0–
Salaries and Wages Expense	100,000
Total	$1,171,420		$1,171,420

Unrecorded transactions:

1.		On May 1, 2019, Whispering Winds purchased equipment for $16,200 plus sales taxes of $1,800 (all paid in cash).
2.		On July 1, 2019, Whispering Winds sold for $3,600 equipment which originally cost $5,200. Accumulated depreciation on this equipment at January 1, 2019, was $1,800; 2019 depreciation prior to the sale of the equipment was $400.
3.		On December 31, 2019, Whispering Winds sold on account $5,500 of inventory that cost $3,300.
4.		Whispering Winds estimates that uncollectible accounts receivable at year-end is $4,200.
5.		The note receivable is a one-year, 8% note dated April 1, 2019. No interest has been recorded.
6.		The balance in prepaid insurance represents payment of a $3,720 6-month premium on September 1, 2019.
7.		The buildings are being depreciated using the straight-line method over 30 years. The salvage value is $30,000.
8.		The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.
9.		The equipment purchased on May 1, 2019, is being depreciated using the straight-line method over 5 years, with a salvage value of $2,400.
10.		The patent was acquired on January 1, 2019, and has a useful life of 10 years from that date.
11.		Unpaid salaries and wages at December 31, 2019, total $2,200.
12.		The unearned rent revenue of $3,600 was received on December 1, 2019, for 3 months’ rent.
13.		Both the short-term and long-term notes payable are dated January 1, 2019, and carry a 9% interest rate. All interest is payable in the next 12 months.

Journalizing entries

Answer 1

Journal entries.

1. Equipment a/c.........................Dr 16200

Sales tax a/c............................Dr 1800

To cash a/c 18000

(Being the equipment purchased and paid through cash)

2. Accumulated depreciation a/c.....Dr 2200

To equipment a/c 2200

( Being the depreciation charged to equipment)

3. Cash a/c...........................Dr 3600

To equipment a/c 3000

To profit and loss a/c 600

(Being the equipment sold)

4. Debtors a/c...................Dr 5500

To inventory a/c 3300

To profit and loss a/c 2200

(Being the inventory sold on account)

5. Doubtful debtors a/c........Dr 4200

To debtors 4200

(Being the doubtful debts are segregated from total debtors)

6. Insurance premium a/c.........Dr 3720

To prepaid insurance a/c 3720

(Being the prepaid insurance was treated as insurance premium )

7. Depreciation a/c....................Dr 4200

To buildings a/c . 4200

(Being the depreciation charged to buildings)

8. Depreciation a/c..................Dr 12340

To equipment a/c 12340

(Being the depreciation is charged to equipment)

9. Amortization a/c............Dr 1010

To patents a/c 1010

(Being the patents are amortized for this year)

10. Salaries a/c .............dr .2200

To salaries payable a/c. 2200

(Being the unpaid salaries recorded)

11. Cash a/c.................Dr 3600

To advance rent a/c 3600

(Being advance rent received treated as deposit)

12. Interest on notes payable a/c.........Dr 4320

To cash a/c 4320

(Being the interest on notes payable paid in cash)

These are all the entries required to solve the given question.

I hope, all the entries mentioned above are useful and helpful to you.

Thank you.