Reference no: EM131632777
Financial Accounting
Prepare all of the necessary journal entries for Big Box Merchandising Company. The company's year-end is 12-31-2015. Pay very close attention to the dates of the transactions. Read through the entire set of transaction first and make sure you organize your entries properly. Have attention to detail!
Post your journal entries to T-Accounts.
Finally prepare the Trial Balance (no financial statements needed) at December 31, 2015.
1. Big Box Merchandising company had a issuance of stock on January 1, 2015. In this issuance they issued 100,000 shares of stock for a price of $10 per share. The par value of the stock was $1.
2. On January 1, 2015 Big Box purchased 200 shirts to be sold in their store. The shirts cost $5 each. Big Box will pay for these on account.
3. On January 31, 2015 Big Box paid the outstanding balance on the January 1 inventory purchase transaction.
4. On January 1, 2015 Big Box purchased $50,000 of 5% bonds as a held to maturity investment at a price of 102. The bonds mature on December 31, 2020.
a. The bonds pay interest on June 30 and December 31.
b. Be sure to prepare all necessary entries for this investment through December 31, 2015 so that you have an accurate Trial Balance.
5. On February 15, Big Box purchased 50 more shirts to be sold in their store. The shirts cost $7 each. Big Box will pay for these on account.
6. On February 16, 2015 Big Box sold 225 shirts for $20. 125 of the shirts were sold for cash. The remaining were sold on account. The company uses the FIFO inventory method.
7. On February 20, 2015 Big Box retailer paid their outstand balance from the February 15th transaction.
8. On February 25th Big Box merchandising collected the outstanding balance from the February 16th transaction.
9. Big Box Merchandising made the following additional inventory purchases throughout the year. All purchases were for blue shirts to be sold in their stores.
a. March 15 - purchased 100 shirts for $2 on credit
b. May 20 - purchased 50 shirts for $3 on credit
c. July - purchased 25 shirts for $5 for cash
10. The following sales transactions took place throughout the year.
a. May 30 - sold 75 shirts for $30 on credit
b. August 15 - sold 20 shirts for $35 on credit
c. October 15 - sold 25 shirts for $20 all cash
11. On November 1, 2015 Big Box purchased an insurance policy in advance for $3,000 paying cash. The policy covers three months. Prepare all necessary journal entries for this transaction through December 31, 2015.
12. Big Box Merchandising needs to accrue for their December 31, 2015 telephone bill, which should arrive in the second week of January 2016. The company estimates that they used up $150 of their telephone service during the month of December.
13. Big Box Merchandising signed a contract to provide shirts to Walmart starting in 2016. Walmart paid Big Box $2,000,000 in advance on December 26, 2015.
14. On December 1, 2015 Big Box purchased 1,000 shares of Company B stock at $2 per share.
a. The current market price of Company B stock on December 31, 2015 is $6 per share. Prepare any necessary entries to reflect this change.
15. Have a safe and fun summer break.