Accounting
The lease on the building is for two years, so it is highly unlikely that this is a finance lease. It does not appear that the Large Mart is going to take ownership of the building. Thus, since this is not a finance lease, the journal entry would simply record the rent. There is no opening entry, just an expense.
621 Rent Expense
101 Cash at bank
The wages show as a journal entry at the end of the month. Because the employees were not paid, the wage expense shows as the creation of a liability. The liability account is later offset when the two are paid.
624 Wage Expense
204 Wages Payable
204 Wages Payable
101 Cash at Bank
Well the first to do is have a chat with the audit department about that $12,000 trip to China. It does not cost that much, unless he's buying some luxury on the company dime, which if I'm in charge doesn't happen. But as far as the journal entries, the key is deciding how to classify this bed. An oversized $40,000 bed is not inventory; it is part of the store fixtures. The closest thing is machinery/equipment, since that category is fairly vague. Given the categories provided, the China trip is a salary expense. But that is only because there is no category for marketing or administrative expenses. Not sure why there wouldn't be a category for that.
164 Machinery/Equipment
40000
202 Accounts Payable
40000
624 Wage Expense
12000
202 Accounts Payable
12000
4. The inventory order is not recorded until the inventory is received -- you need to have that certainty about delivery before you record it because without delivery there is no legal obligation to pay created. The returned beds are recorded as a reversal of the sale for those. With a FIFO system, the beds would be considered to be the last out, so valued at $750 in inventory/COGS.
June 1st
120 Inventory - Trade/Sales
40000
202 Accounts Payable
40000
June 5th
120 Inventory - Trade/Sales
45000
202 Accounts Payable
45000
June 6th
202 Accounts Payable
45000
101 Cash at Bank
45000
June 7th
102 Accounts Receivable
250000
401 Sales Revenue
250000
500 Cost of Goods Sold
77500
120 Inventory Trade/Sales
77500
June 8th
120 Inventory Trade/Sales
15000
500 Cost of Goods Sold
15000
401 Sales Revenue
50000
102 Accounts Receivable
50000
June 10th
101 Cash at Bank
190000
641 Discount Given - Payment
10000
102 Accounts Receivable
200000
June 10th
202 Accounts Payable
40000
101 Cash at Bank
36000
441 Discount Received-Payment
June 12th
120 Inventory - Trade/Sales
35000
202 Accounts Payable
35000
June 14th
202 Accounts Payable
35000
101 Cash at Bank
31500
441 Discount Received-Pmt
5. For these items, we use the journal entries. For COGS and revenue it is straightforward.
Cost of Goods Sold
June 7th
77500
June 8th
15000
Total
62500
Revenue
June 7th
250000
June 8th
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