Suzie & Jarrett’s Nugget Company

Suzie & Jarrett’s Nugget Company

December 31, 2015

Prepare a Journal Entries and T-Accounts:

Cash                                                  $200,000

Accounts Receivable                             40,000

Inventory (500 Nuggets @ 200 each)         100,000

Prepaid Insurance                                   3,600

Equipment                                        410,000

Accumulated Depreciation                120,000

Security Deposit                                   10,000

Accounts Payable                                 30,000

Taxes Payable                                      10,000

Wages Payable                                        7,000

Rent Payable                                           2,000

Note Payable                                        300,000

Common Stock (1,000 shares)                         1,000

Paid in Capital                                       19,000

Retained Earnings                                         274,600

During 2016 the following transactions occurred:

          Paid prior year’s accounts payable.

          Received prior year’s accounts receivable.

          Sold 1,200 Nuggets for $400 each with 50% down (cash) and the other 50% will get later.

          Paid 2015 taxes payable.

          Paid cash for wages of $60,000.

          Paid fourteen months’ rent $28,000.

          Paid $3,000 for advertising for 2016.

          Sold 500 shares of common stock for $40.00 each on September 30, 2016.

          Paid utility bill for 2014, $2,000.

          Paid annual payment on note payable of $20,000 principal plus interest at 4% on December 31.

          Paid a $5,000 dividend to shareholders on December 31, 2016.

Also, during the year the company paid 50% of the 2016 taxes. The tax rate is 30%. The company uses the FIFO inventory system.

At December 31, 2016, the company owed $5,000 in wages which had not yet been paid.

The prepaid insurance account at December 31, 2015 represent a policy that covers 2016 and 2017.

The equipment originally cost $410,000, had a twenty year life and was expected to be worth $10,000 at the end.