Question

B	Richards Company does not separate sales and sales taxes in its register.
	The register total for December is	$            90,300
	The sales tax rate is 5%
	INSTRUCTIONS:
	Prepare the journal entry to record the sales and the related sales taxes
	at December 31, 2019.

3/1/2019	Eclipse Corp. sold a piece of equipment for			25,000
	Original cost of equipment		150,000
	Accumulated depreciation as of January 1, 2019		133,000
	Depreciation expense per month		1,000
	INSTRUCTIONS: Prepare the journal entries to record the sale of this equipment
		on March 1, 2019

On January 1, 2019, Glaser Corp. issued 5 year 6% bonds payable at face value of				800,000
Interest is payable semi-annually on July 1 and January 1.
INSTRUCTIONS:   Prepare the journal entries to issue the bonds, pay interest and
	accrue the interest at year end.

Answer 1

1.

Sales tax = 5%

Total of sales and sales tax = $90,300

Sales tax = 90,300 x 5/105

= $4,300

Sales revenue = 90,300 - 4,300

= $86,000

Journal

December 31, 2019	Accounts receivables	90,300
	Sales		86,000
	Sales tax payable		4,300

2.

Original cost of equipment = $150,000

Accumulated depreciation as of January 1, 2019 = $133,000

Depreciation expense per month = $1,000

Depreciation expense for January and February = 1,000 x 2

= $2,000

Accumulated depreciation as of March 1, 2019 = $133,000 + 2,000

= $135,000

Book value of equipment = Original cost of equipment - Accumulated depreciation as of March 1, 2019

= 150,000 - 135,000

= $15,000

Sale price of equipment = $25,000

Gain on disposal of equipment =  Sale price of equipment - Book value of equipment

= 25,000 - 15,000

= $10,000

Journal

March 1, 2019	Cash	25,000
	Accumulated depreciation - Equipment	135,000
	Equipment		150,000
	Gain on disposal of equipment		10,000

3.

January 1, 2019	Cash	800,000
	Bonds payable		800,000
July 1, 2019	Interest expense	24,000
	Cash		24,000
Dec. 31, 2019	Interest expense	24,000
	Interest payable		24,000

Semi annual interest payment = 800,000 x 6% x 6/12

= $24,000

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