Question

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Application Problem 3-8A Offcopy Ltd. (OL) is an office supply company that also sells and services commercial office copiers. OL was founded in 2016 and has seen significant growth since then. OL's bookkeeper retired in August and ding the following transactions from the month of September 2020: Regular entries: Sept. 1 1 5 12 OL purchased a new delivery truck for $58,400, paying $20,000 cash and financing the balance using a note payable at 9% per annum. The note payable is due in 12 months, and interest on the note must be paid on the first day of every month, beginning on October 1, 2020. OL's management has determined that the truck will have a useful life of six years and a residual value of $8,000. (Use Notes Payable) OL paid $1,920 for an insurance policy on the new truck for the period September 1, 2020, to August 31, 2021. The company purchased inventory on credit at a cost of $12,000. Pinamalas University, one of OL's largest customers, signed a photocopy service contract with OL. The contract runs from October 1, 2020, to September 30, 2021, and will mean that OL services all of the university's photocopiers. In accordance with the contact terms, Pinamalas paid OL $7,500, representing the first month's service revenue under the contract. OL sold $17,000 of office supplies, of which one-quarter was on account and the balance was cash. The cost to OL of the products sold was $12,500. OL paid dividends in the amount of $12,000, which had been declared by the board (and recorded) in August 2020. 18 30 Adjusting entries: Sept. 30 30 30 OL made the necessary month-end adjusting entry related to the depreciation of the new delivery truck. OL made the necessary month-end adjusting entry related to the interest on the note payable. OL made the necessary month-end adjusting entry related to the insurance policy. Prepare the journal entries and adjusting entries for the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)

Answer 1

regular entries:
Date	Accounts Title	Debit $	Credit $
1-Sep	Delivery truck	58400
	Cash		20000
	Notes Payable		38400
	(purchase of truck with financing on Notes)
1-Sep	Pre-paid Insurance	1920
	Cash		1920
	(purchase on insurance for one year for truck)
5-Sep	Inventory	12000
	Accounts payable		12000
	(inventory purchased on credit)
12-Sep	Cash	7500
	Unearned revenue		7500
	(advance payment of revenue received)
18-Sep	Cash	12750
	Accounts Receivable	4250
	Sales revenue		17000
	(sales revenue recorded)
	COGS	12500
	Inventory		12500
	(cost of sales recorded)
30-Sep	Dividend payable	12000
	Cash		12000
	(being dividend due paid)
Adjustment entries:
30-Sep	Depreciation exp.	2800		(58400-8000)*4/(6*12)
	Acc. Dep.		2800
	(depreciation on truck recorded)
30-Sep	Interest expense	288		(38400*9%*1/12)
	Interest payable		288
	(interest on Note payable made due)
30-Sep	Insurance expense	160		(1920/12)
	Prepaid Insurance		160
	(being insurance expense for sept recorded)