JOURNAL ENTRIES AND ADJUSTING JOURNAL ENTRIES
DAILY JOURNAL ENTRIES
Model trains for sale to toy stores are produced by Whistle Stop Incorporated, a small manufacturing company. Whistle Stop also has a small service department that repairs customers’ model trains for a fee. The company has been in business for five years. At the end of the most recent fiscal year, November 30, 2011, the accounting records reflected total assets of $500,000 and total liabilities of $200,000. During the current fiscal year ending November 30, 2012, the following summarized events occurred:
a. Issued additional common shares for $200,000. b. Borrowed $120,000 cash from the bank and signed a 10-year promissory note. c. Built an addition on the factory for $200,000 and paid cash to the contractor. d. Purchased equipment for the new addition for $30,000, paying $3,000 in cash and signing a note due in six months for the balance. e. Returned a $3,000 piece of equipment, from (d), because it proved to be defective; receiving a reduction of the note payable. f. Performed repairs on model trains for customers for $2,500. The customers paid for the repairs in cash. g. Purchased a delivery truck for $10,000; paid $5,000 cash and signed a nine-month note for the remainder. h. A shareholder sold $5,000 worth of his shares in Whistle Stop Incorporated to his neighbour. i. Repaid $25,000 cash on the bank note borrowed in (b). j. Performed repairs on model trains for customers for $3,000 on account. k. Purchased office equipment for $1,000; paying cash. l. Paid a $15,000 cash dividend to the shareholders. m. Purchased supplies for $30,000 on account.
Whistle Stop Incorporated | General Journal | Page 1 | a. | Cash | 200,000 | | | Common shares | | 200,000 | b. | Cash | 120,000 | | | Long-term Note payable | |