Question

TRANSACTIONS
Dec 1 At the beginning of December, the two principal owners invested an additional $80,000
each in exchange for shares of stock in preparation to expand their operations in the
near future. The shares were trading at $5/share on December 1 st .
Dec 1 Purchased land for $70,000 to be used for a new gym facility with construction planned
for 2021. Desert paid 20% down and signed a 9-month, 6% note for the balance.
Principal and interest is to be paid at maturity on August 31, 2020.
Dec 1 The Company purchased additional equipment for $164,800, paying 25% down and
giving a one-year, 6% note for the balance, with principal & interest payable at maturity.
Dec 1 Employees are paid on the 1 st and 15 th of each month. Paid the balance of what was
owed at November 30, 2019.
Dec 1 Sold a piece of equipment for $5,420 cash proceeds. The equipment had an original cost
of $24,000 and a 10% salvage value. All equipment is depreciated on a straight-line
basis. The equipment was 80% depreciated on the date of the disposal.
Dec 2 Purchased on account a total of 320 t-shirts and tanks with a silk-screened Desert logo
from T-Shirt Creations at a price of $8 per shirt. These shirts are available for resale to
customers.
Dec 2 Received a bill for $2,550 from Desert’s attorney for legal services rendered, to be paid
by January 2, 2020.
Dec 4 Purchased office supplies for $750 on account from Max Office Supplies. The Company
has 30 days to pay for the supplies.
Dec 5 During the first week of December, sold eighty, six-month memberships for an
introductory price of $180 each. All membership fees were collected in cash.
Dec 5 Sold twenty t-shirts to a corporate member, Allen & Associates for $20 each. Collected
$100 in cash and the balance was charged to the customer’s account. The original cost
of the apparel was $160.
Dec 7 During the first week of December, provided 210 hours of personal training services to
members. Fees are charged at a rate of $20/hour. Of these fees, $700 was collected in
cash and the balance was billed to individual member’s accounts.
Dec 15 For the first half of December, provided a variety of group exercise programs. Each
member is charged $10/class and 720 members participated during this time. Billed
the individual members’ accounts for services provided.

6

Dec 15 Paid wages to employees of $10,200 and salaries to officers of $15,000; associated
payroll taxes on these wages & salaries are $2,041. (You can record in two separate
journal entries. Payroll taxes are an expense to the company for unemployment
benefits and recorded as a payable to the state and federal taxing authority on a
quarterly basis. They will be paid on Jan 1)
Dec 15 Sold fifty, six-month memberships for $180 each. Collected the fees in cash.
Dec 18 Paid the total amounts due to T-Shirt Creations, the Company’s attorney and Max
Office Supplies. (record as one journal entry)
Dec 21 Through the first three weeks in December, sold apparel to members for a retail selling
price of $3,800. The original cost of the merchandise sold was $2,120. Collected 40%
in cash, the balance was billed to each customer’s account.
Dec 22 Desert declared a cash dividend of $0.20 per share, payable January 30, 2020.
Dec 26 Collected the balance of what was owed on account from Allen & Associates. Also
collected 40% of the fees for group exercise classes & personal training services billed
to customer’s accounts during the first half of December.
Dec 27 Received a utility bill that totaled $1,750 for the month and a telephone bill for $356.
Both were paid.
Dec 31 Desert Fitness provided you with the following information regarding the remaining
activities for the month of December:
a. Fees for group classes for the last half of December
(billed to members’ accounts) $ 8,700
b. Fees for personal training sessions completed
during December (60% collected in cash) 4,900
c. Cash sales of apparel (original cost of apparel was
$840) 1,600
d. Credit sales for apparel during the
remainder of December. 2,840
Cost of apparel sold from Dec. 22-31 1,436
e. Cash received during Dec. for services previously
billed to members’ accounts. 52,950
f. Of the amounts owed to suppliers on account, $12,400
Represent repairs that were made to the heating & cooling
System of the gym in November. This account was paid. 12,400
g. Desert was notified that one of their corporate account
Members had declared bankruptcy. Desert wrote off
The account. $ 2,170

Please convert to journal entries

Answer 1

Journal entries

S. No	GL Account	Debit	Credit	Narration
01-Dec	Cash	80,000		Additional investment by shareholders
01-Dec	Common Stock		80,000	Additional investment by shareholders
01-Dec	Land	70,000		Land purchased
01-Dec	Cash		14,000	Land purchased
01-Dec	Notes Payable		56,000	Land purchased
01-Dec	Equipment	1,64,800		Additional equipments purchased
01-Dec	Cash		41,200	Additional equipments purchased
01-Dec	Notes Payable		1,23,600	Additional equipments purchased
01-Dec	Cash	5,420		Sale of a piece of Equipment
01-Dec	Accumulated Depreciation	19,200		Sale of a piece of Equipment (80% of 24,000)
01-Dec	Equipment		24,000	Sale of a piece of Equipment
01-Dec	Gain on sale of Asset		620	Sale of a piece of Equipment
02-Dec	Inventory	2,560		320 T-Shirts purchased
02-Dec	Accounts Payable		2,560	320 T-Shirts purchased
02-Dec	Legal Expenses	2,550		Bill from Desert's attorney
02-Dec	Accounts Payable		2,550	Bill from Desert's attorney
04-Dec	Office supplies	750		Office supplies purchased
04-Dec	Accounts Payable		750	Office supplies purchased
05-Dec	Cash	14,400		Eighty, Six monthly membership sold
05-Dec	Membership Fees earned		14,400	Eighty, Six monthly membership sold
05-Dec	Cash	100		20 T shirts sold at $ 20 each
05-Dec	Accounts Receivable	300		20 T shirts sold at $ 20 each
05-Dec	Sales Revenue		400	20 T shirts sold at $ 20 each
05-Dec	Cost of goods sold	160		COGS booked for T shirts sold
05-Dec	Inventory		160	COGS booked for T shirts sold
07-Dec	Cash	700		Training service income for 210 hours
07-Dec	Accounts Receivable	3,500		Training service income for 210 hours
07-Dec	Training service income		4,200	Training service income for 210 hours
15-Dec	Accounts Receivable	7,200		Exercise program revenue booked
15-Dec	Excercise program revenue		7,200	Exercise program revenue booked
15-Dec	Salaries and wages	25,200		Salaries and wages paid
15-Dec	Payroll Taxes	2,041		Payroll taxes liability booked
15-Dec	Cash		25,200	Salaries and wages paid
15-Dec	Payroll taxes payable		2,041	Payroll taxes liability booked
15-Dec	Cash	9,000		50, six monthly membership sold
15-Dec	Membership Fees earned		9,000	50, six monthly membership sold
18-Dec	Accounts Payable	5,860		Account payable paid
18-Dec	cash		5,860	Account payable paid
21-Dec	Cash	1,520		Merchantise sold
21-Dec	Accounts Receivable	2,280		Merchantise sold
21-Dec	Sales Revenue		3,800	Merchantise sold
21-Dec	Cost of goods sold	2,120		COGS booked for T shirts sold
21-Dec	Inventory		2,120	COGS booked for T shirts sold
22-Dec	Dividend	3,200		Dividend declared for 16,000 shares issued this month @ $ 0.20/share
22-Dec	Dividend payable		3,200	Dividend declared for 16,000 shares issued this month @ $ 0.20/share
26-Dec	Cash	6,680		Amount collected from Allen Amp plus 40% of Group excercise program, and training income
26-Dec	Accounts Receivable		6,680	Amount collected from Allen Amp plus 40% of Group excercise program, and training income
27-Dec	Utility expenses	1,750		Utility bill paid
27-Dec	Telephone expenses	356		Telephone bill paid
27-Dec	Cash		2,106	Utility and telephone bill paid
31-Dec	Accounts Receivable	8,700		Fees for group classes
31-Dec	Excercise program revenue		8,700	Fees for group classes
31-Dec	Cash	2,940		Training service income booked
31-Dec	Accounts Receivable	1,960		Training service income booked
31-Dec	Training service income		4,900	Training service income booked
31-Dec	Cash	1,600		Merchantise sold
31-Dec	Sales Revenue		1,600	Merchantise sold
31-Dec	Cost of goods sold	840		COGS booked for T shirts sold
31-Dec	Inventory		840	COGS booked for T shirts sold
31-Dec	Accounts Receivable	2,840		Merchantise sold
31-Dec	Sales Revenue		2,840	Merchantise sold
31-Dec	Cost of goods sold	1,436		COGS booked for T shirts sold
31-Dec	Inventory		1,436	COGS booked for T shirts sold
31-Dec	Cash	52,950		Cash received from customers
31-Dec	Accounts Receivable		52,950	Cash received from customers
31-Dec	Accounts Payable	12,400		Account payable paid
31-Dec	Cash		12,400	Account payable paid
31-Dec	Bad Debts	2,170		Debtors written off due to bankruptcy
31-Dec	Accounts Receivable		2,170	Debtors written off due to bankruptcy