Fix my General journal(some might be wrong or do not have to be in it) and trial

ID: 2587804 • Letter: F

Question

Fix my General journal(some might be wrong or do not have to be in it) and trial balance and explain what did i did wrong? Its also says use 2.5% instead of 5% cause its half of it which i didn't get?

Ty Koon, Harry Pitts and Eileen Dover are the founders of Sharpe Incorporated. The charter of the corporation authorized 500,000 shares of $5 par common stock, and 50,000 shares of $40 par, 5%, preferred stock. The company began business on January 1 of the current year.

Selected transactions completed by Sharpe Incorporated during the fiscal year-ending December 31, 2013, are as follows:

Jan 1 Issued 16,000 shares of $5 par common stock at $18, receiving cash.

Jan 1 Issued 7,200 shares of $40 par preferred 5% stock at $42 for cash. The dividends are payable semi-annually.

Jan 31 Purchased a two-year insurance policy for $34,080.

Feb 1 Purchased equipment for $290,000 in exchange for paying $50,000, issuing a $50,000, 180-day, 5% note payable, and issuing 9,500 shares of common stock.

May 1 Purchased 1,200 shares of the company’s own common stock at $22 per share.

June 1 Declared a cash dividend at the stated amount on the preferred stock.

June 30 Paid the cash dividend on the preferred stock.

July 1 Issued $1,000,000 of 9-year, 8% bonds with interest payable semiannually. The amount of cash received was $1,092,880.

July 30 Paid the amount due on the note payable signed on February 1.

Aug 1 Sold 450 shares of treasury common stock purchased on May 1 for $26 per share.

Oct 1 Purchased 30,000 of the 100,000 outstanding shares of Precision Corporation for $5.10 per share, plus a $125 commission to the stockbroker.

Oct 16 Sold 250 shares of treasury common stock purchased on May 1 for $20 per share.

Nov. 1 Borrowed $36,000 from Second Bank by issuing a 90-day, 7% note.

Dec 15 Declared a cash dividend at the stated amount to preferred stockholders and $.50 per share on the outstanding common shares. The date of record is December 30, and the dividend is payable January 15, 2014.

Dec 31 Record revenue for the year of $1,975,000, receiving $500,000 in cash with the remainder on account.

Dec 31 Record expenses for the year (one compound entry). All were paid in cash, except for $30,000 on account.

Rent $170,000

Utilities 13,200

Salaries 760,000

Payroll tax expense 45,600

Advertising 120,000

Medical insurance 32,000

Commissions 63,000

Legal and accounting 18,000

Miscellaneous 8,400

Dec. 31 Paid the semiannual interest and amortized the premium on the bonds issued on July 1.

Dec. 31 Received a cash dividend from Precision Corporation of $0.10 per share.

Dec. 31 Precision Corporation reported earnings of $25,000 for the period from October 1 to December 31.

Journal Entries

Date

General Journal

Debit

Credit

Jan.1

Cash (16,000 Shares x $18)

$288,000

Common Stock (16,000 Shares x Par $5)

$80,000

Paid in Capital in Excess of Par - Common Stock (Bal.Fig.)

$208,000

Jan.1

Cash (7200 Shares x $42)

$302,400

Preferred Stock (7200 Shares x Par $40)

$288,000

Paid in Capital in Excess of Par - Preferred Stock (Bal.Fig.)

$14,400

Jan.31

Prepaid Insurance

$34,080

Cash

$34,080

Feb.1

Equipment

$290,000

Cash

$50,000

Notes Payable

$50,000

Common Stock (9500 Shares x Par $5)

$47,500

Paid in Capital in Excess of Par - Common Stock (Bal.Fig.)

$142,500

May.1

Treasury Stock (1200 Shares x $22)

$26,400

Cash

$26,400

June.1

Retained Earnings (7200*$40*5%)

$14,400

Preferred Stock Dividend Payable

$14,400

June.30

Preferred Stock Dividend Payable

$14,400

Cash

$14,400

July.1

Cash

$1,092,880

Bonds Payable (at face value)

$1,000,000

Premium on Bonds Payable (Bal. figure)

$92,880

July.30

Notes Payable

$50,000

Interest Expense (50,000*5%*180/360)

$1,250

Cash

$51,250

Aug.1

Cash (450 Shares x $26)

$11,700

Treasury Stock (450 Shares x Cost $22)

$9,900

Paid in Capital from Treasury Stock (Bal. figure)

$1,800

Oct.1

Equity Investment - Precision Corporation (30000 Shares x $5.10)

$153,000

Commission Expense

$125

Cash

$153,125

Oct.16

Cash (250 Shares x $20)

$5,000

Retained Earnings (Bal. figure)

$500

Treasury Stock (250 Shares x Cost $22)

$5,500

Nov.1

Cash

$36,000

Notes Payable

$36,000

Dec.15

Retained Earnings

$26,900

Preferred Stock Dividend (7200*$40*5%)

$14,400

Common Stock Dividend (0.50*(16000+9500-1200+450+250)

$12,500

Dec.30

No Entry on record date

Dec.31

Accounts Receivable

$1,475,000

Cash

$500,000

Sales Revenue

$1,975,000

Dec.31

Rent

$170,000

Utilities

$13,200

Salaries

$760,000

Payroll tax expense

$45,600

Advertising

$120,000

Medican Insurance

$32,000

Commissions

$63,000

Legal and accounting

$18,000

Miscellaneous

$8,400

Cash

$1,200,200

Accounts Payable

$30,000

Dec.31

Interest Expense (Bal figure)

$34,840

Premium on Bonds Payable (92,880/18)

$5,160

Cash Interest Paid (Face Value 1000,000*8%*1/2 semi annual)

$40,000

Dec.31

Cash

$3,000

Equity Investment - Precision Corporation (30,000 Shares x $0.10)

$3,000

Dec.31

Equity Investment - Precision Corporation (25,000*30%)

$7,500

Equity Income - Precision Corporation

$7,500

Everything is right except ones marked wrong please help

Correct Total balance should come out to: 3937620

Date

General Journal

Debit

Credit

Jan.1

Cash (16,000 Shares x $18)

$288,000

Common Stock (16,000 Shares x Par $5)

$80,000

Paid in Capital in Excess of Par - Common Stock (Bal.Fig.)

$208,000

Jan.1

Cash (7200 Shares x $42)

$302,400

Preferred Stock (7200 Shares x Par $40)

$288,000

Paid in Capital in Excess of Par - Preferred Stock (Bal.Fig.)

$14,400

Jan.31

Prepaid Insurance

$34,080

Cash

$34,080

Feb.1

Equipment

$290,000

Cash

$50,000

Notes Payable

$50,000

Common Stock (9500 Shares x Par $5)

$47,500

Paid in Capital in Excess of Par - Common Stock (Bal.Fig.)

$142,500

May.1

Treasury Stock (1200 Shares x $22)

$26,400

Cash

$26,400

June.1

Retained Earnings (7200*$40*5%)

$14,400

Preferred Stock Dividend Payable

$14,400

June.30

Preferred Stock Dividend Payable

$14,400

Cash

$14,400

July.1

Cash

$1,092,880

Bonds Payable (at face value)

$1,000,000

Premium on Bonds Payable (Bal. figure)

$92,880

July.30

Notes Payable

$50,000

Interest Expense (50,000*5%*180/360)

$1,250

Cash

$51,250

Aug.1

Cash (450 Shares x $26)

$11,700

Treasury Stock (450 Shares x Cost $22)

$9,900

Paid in Capital from Treasury Stock (Bal. figure)

$1,800

Oct.1

Equity Investment - Precision Corporation (30000 Shares x $5.10)

$153,000

Commission Expense

$125

Cash

$153,125

Oct.16

Cash (250 Shares x $20)

$5,000

Retained Earnings (Bal. figure)

$500

Treasury Stock (250 Shares x Cost $22)

$5,500

Nov.1

Cash

$36,000

Notes Payable

$36,000

Dec.15

Retained Earnings

$26,900

Preferred Stock Dividend (7200*$40*5%)

$14,400

Common Stock Dividend (0.50*(16000+9500-1200+450+250)

$12,500

Dec.30

No Entry on record date

Dec.31

Accounts Receivable

$1,475,000

Cash

$500,000

Sales Revenue

$1,975,000

Dec.31

Rent

$170,000

Utilities

$13,200

Salaries

$760,000

Payroll tax expense

$45,600

Advertising

$120,000

Medican Insurance

$32,000

Commissions

$63,000

Legal and accounting

$18,000

Miscellaneous

$8,400

Cash

$1,200,200

Accounts Payable

$30,000

Dec.31

Interest Expense (Bal figure)

$34,840

Premium on Bonds Payable (92,880/18)

$5,160

Cash Interest Paid (Face Value 1000,000*8%*1/2 semi annual)

$40,000

Dec.31

Cash

$3,000

Equity Investment - Precision Corporation (30,000 Shares x $0.10)

$3,000

Dec.31

Equity Investment - Precision Corporation (25,000*30%)

$7,500

Equity Income - Precision Corporation

$7,500

Explanation / Answer

Date General Journal Debit Credit Jan.1 Cash (16,000 Shares x $18) 2,88,000 Common Stock (16,000 Shares x Par $5) 80,000 Paid in Capital in Excess of Par - Common Stock (Bal.Fig.) 2,08,000 208000 Jan.1 Cash (7200 Shares x $42) 3,02,400 Preferred Stock (7200 Shares x Par $40) 2,88,000 288000 Paid in Capital in Excess of Par - Preferred Stock (Bal.Fig.) 14,400 14400 Jan.31 Prepaid Insurance A/c…………………Dr 17040 Insurance A/c……………….Dr 17,040 Cash 34,080 Feb.1 Equipment 2,90,000 Cash 50,000 5% Notes Payable 50,000 Common Stock (9500 Shares x Par $5) 47,500 Paid in Capital in Excess of Par - Common Stock (Bal.Fig.) 1,42,500 May.1 Treasury Stock (1200 Shares x $22) 26,400 Cash 26,400 June.1 Retained Earnings (7200*$40*5%) 14,400 Preferred Stock Dividend Payable 14,400 June.30 Preferred Stock Dividend Payable 14,400 Cash 14,400 July.1 Cash 10,92,880 8% Bonds Payable (at face value) 10,00,000 Premium on Bonds Payable (Bal. figure) 92,880 July.30 Notes Payable 50,000 Interest Expense (50,000*5%*180/360) 1,250 Cash 51,250 Aug.1 Cash (450 Shares x $26) 11,700 Treasury Stock (450 Shares x Cost $22) 9,900 Paid in Capital from Treasury Stock (Bal. figure) 1,800 Oct.1 Equity Investment - Precision Corporation (30000 Shares x $5.10) 1,53,000 Commission Expense 125 Cash 1,53,125 Oct.16 Cash (250 Shares x $20) 5,000 Retained Earnings (Bal. figure) 500 Treasury Stock (250 Shares x Cost $22) 5,500 Nov.1 Cash 36,000 7% Notes Payable 36,000 Dec.15 Retained Earnings 26,900 Preferred Stock Dividend (7200*$40*5%) 14,400 Common Stock Dividend (0.50*(16000+9500-1200+450+250) 12,500 Dec.30 No Entry on record date Dec.31 Accounts Receivable 14,75,000 Cash 5,00,000 Sales Revenue 19,75,000 Dec.31 Rent 1,70,000 Utilities 13,200 Salaries 7,60,000 Payroll tax expense 45,600 Advertising 1,20,000 Medican Insurance 32,000 Commissions 63,000 Legal and accounting 18,000 Miscellaneous 8,400 Cash 12,00,200 Accounts Payable 30,000 Dec.31 Interest Expense (Bal figure) 34,840 Premium on Bonds Payable (92,880/18) 5,160 Cash Interest Paid (Face Value 1000,000*8%*1/2 semi annual) 40,000 Dec.31 Cash 3,000 Equity Investment - Precision Corporation (30,000 Shares x $0.10) 3,000 Dec.31 Equity Investment - Precision Corporation (25,000*30%) 7,500 Equity Income - Precision Corporation 7,500 P&L A/c Particulars Debit Particulars Credit Insurance A/c 17040 Sales Revenue 19,75,000 Preferred Stock Dividend Payable 14,400 Interest Expense (50,000*5%*180/360) 1250 Commission Expense 125 Rent 1,70,000 Utilities 13,200 Salaries 7,60,000 Payroll tax expense 45,600 Advertising 1,20,000 Medican Insurance 32,000 Commissions 63,000 Legal and accounting 18,000 Miscellaneous 8,400 Interest Expense (Bal figure) 40,000 Premium on Bonds Payable (92,880/18) 92,880 13,95,895 19,75,000 To Profit 5,79,105

Cash A/c Common stock A/c Paid in Capital in Excess of Par Particulars Debit Particulars Credit Particulars Debit Particulars Credit Particulars Debit Particulars Credit By Cash A/c 80000 Treasury Stock 500 By Cash A/c 2,08,000 To Common stock 80,000 By Insyrance 17,040 By Equipment 47500 By Cash A/c 14,400 Paid in Capital in Excess of Par - Common Stock 2,08,000 By Prepaid insurance 17,040 By Equipment 1,42,500 Preferred Stock (7200 Shares x Par $40) 2,88,000 By Equipment 50,000 127500 127500 Treasury Stock 1,800 Paid in Capital in Excess of Par - Preferred Stock 14,400 By Treasury stock 26,400 8% Bonds Payable (at face value) 10,00,000 By Preferred Stock Dividend 14,400 3,66,200 3,66,700 Premium on Bonds Payable 92,880 By Notes Payable 50,000 Treasury Stock (450 Shares x Cost $22) 9,900 By Interest Expense (50,000*5%*180/360) 1,250 Preferred Stock A/c Treasury Stock A/c Paid in Capital from Treasury Stock (Bal. figure) 1,800 ByEquity Investment - Precision Corporation (30000 Shares x $5.10) 1,53,000 Particulars Debit Particulars Credit Particulars Debit Particulars Credit Treasury Stock (250 Shares x Cost $22) 5,000 By Commission Expense 125 By Cash A/c 288000 To Cash 26,400 By cash 9,900 7% Notes Payable 36,000 Rent 1,70,000 By cash 5,500 To Sales 5,00,000 Utilities 13,200 Equity Investment - Precision Corporation (30,000 Shares x $0.10) 3,000 Salaries 7,60,000 288000 288000 26,400 11,000 Payroll tax expense 45,600 Advertising 1,20,000 Medican Insurance 32,000 5% Note payable A/c 8% Bonds Payable A/c Commissions 63,000 Particulars Debit Particulars Credit Particulars Debit Particulars Credit Legal and accounting 18,000 To Cash 50000 By Equipment 50000 By Cash 10,00,000 Miscellaneous 8,400 By Interest Expense 40,000 22,38,980 15,99,455 6,39,525 December 31, 2013 Account Name Debit Credit Cash 6,39,525 Account Recaivable 14,75,000 Prepaid Insurance 17,040 Equipment 2,90,000 Accounts Payable 30,000 Investment In Precision 1,50,000 Common Stock 1,27,500 7% Notes Payable 36,000 Cash Dividends Payable 19,700 Bonds Payable 10,00,000 Premium on Bonds 87,720 PIC Common Stock 3,66,200 Preferred Stock 2,88,000 Treasury Stock 11000 Retained earnings 5,79,105 25,82,565 25,34,225

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Fix my General journal(some might be wrong or do not have to be in it) and trial

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