Question

The Feng He Corporation, which is a technology company, was formed on January 1 of the current year. Transactions completed during the first year of operation follow. January 1: Issued 700,000 shares of common stock for $9,800,000, which is the par value of the stock. January 10: Acquired equipment in exchange for $1,500,000 cash and a $3,000,000 note payable. The note is due in 10 years. February 10: Paid $31,200 for a business insurance policy covering the two-year period beginning on March 1. February 14: Purchased $950,000 of supplies on account. March 1: Paid wages of $199,000. March 15: Billed $2,590,000 for services rendered on account. April 3: Paid $130,000 of the amount due on the supplies purchased on February 14. April 17: Billed $1,800,000 for services rendered on account. May 1: Paid wages of $160,000. May 7: Collected $230,500 of the outstanding accounts receivable. May 8: Received bill and paid $98,700 for utilities. May 24 Paid $37,000 for sales commissions. June 4: Made the first payment on the note issued on January 10. The payment consisted of $18,000 of interest and $120,000 to be applied against the principal of the note. June 18: Billed customers for $669,000 of services rendered. June 29 Collected $500,000 on accounts receivable. July 10: Purchased $42,000 of supplies in cash. Aug 25 Paid $160,000 for administrative expenses. Sept 23: Paid $34,500 for warehouse repairs. October 1: Paid wages of $60,000. Nov 23 Purchased supplies for $550,000 on account. Dec 19: Collected $155,000 in advance for services to be provided in December and January of the following year. Dec 30: Declared and paid a $30,000 dividend to shareholders. Requirement b. Post the journal entries to t-accounts. Use the dates as posting references for the journal entries to post each entry to the relevant accounts, then compute the unadjusted balance of each account. Label the unadjusted balances with Unadi. Bal (For accounts with a $0 ending balance, select "Unadi, Bal." and enter"0" on the normal balance side of the t-account.) Review the journal entries prepared in Requirement a.

Answer 1

Jun.4 Note Payable $120,000 $3,000,000 Jan. 10 $2,880,000 End. Bal. Jan. 1 May 7 Jun. 29 Dec. 19 Supplies $950,000 $42,000 $550,000 $1,542,000 Feb. 14 Jul. 10 Nov. 23 End. Bal. Common Stock $9,800,000 Jan. 1 $9,800,000 End. Bal. Cash $9,800,000 $1,500,000 $230,500 $31,200 $500,000 $199,000 $155,000 $130,000 $160,000 $98,700 $37,000 $138,000 $42,000 $160,000 $34,500 $60,000 $30,000 $8,065,100 Jan. 10 Feb. 10 Mar. 1 Apr. 3 May 1 May 8 May 24 Jun.4 Jul. 10 Aug. 25 Sep. 23 Oct. 1 Dec. 30 Feb. 10 End. Bal. Prepaid Insurance $31,200 $31,200 Dec. 30 End. Bal Dividends $30,000 $30,000 Jan. 10 End. Bal. Equipment $4,500,000 $4,500,000 End. Bal. Service Revenue $2,590,000 Mar. 15 $1,800,000 Apr. 17 $669,000 Jun. 18 $5,059,000 End. Bal. Apr. 3 Accounts Payable $130,000 $950,000 Feb. 14 $550,000 Nov. 23 $1,370,000 End. Bal. Accounts Receivable $2,590,000 $230,500 $1,800,000 $500,000 $669,000 $4,328,500 Mar. 15 Apr. 17 Jun. 18 End. Bal. May 7 Jun. 29 Unearned Service Revenue $155,000 Dec. 19 $155,000 End. Bal. Sep. 23 End. Bal Repairs Expense $34,500 $34,500

Salaries and Wages Expense Mar. 1 $199,000 May 1 $160,000 Oct. 1 $60,000 End. Bal. $419,000 May 8 End. Bal. Utilities Expense $98,700 $98,700 Sales Commission Expense May 24 $37,000 End. Bal. $37,000 Jun.4 End. Bal. Interest Expense $18,000 $18,000 Aug. 25 End. Bal. Administrative Expense $160,000 $160,000