Homework answers / question archive / Prepare journal entries for the following transactions (and necessary end-of-months adjustments) for the company LMK Ltd

Prepare journal entries for the following transactions (and necessary end-of-months adjustments) for the company LMK Ltd

Accounting

Share With

Prepare journal entries for the following transactions (and necessary end-of-months adjustments) for the company LMK Ltd. January 2 2 2 3 4 6 7 9 10 Sold a truck for kr 100,000 in cash. Its original cost is kr 500,000 and recorded accumulated depreciation equals to kr 330,000. Purchased a new truck for kr 250,000. Related expenditures consist of sales taxes of kr 25,000, painting and lettering of kr 15,000, motor vehicle license of kr 1,800, and a three-year accident insurance policy of kr 70,000. LMK issued a five-year, 4% bond with a face value of kr 1,000,000 for a price of kr 1,050,000. Interest is payable annually on January 1st. Cash payment of kr 120,000 that relates to annual rent. A client paid kr 70,000 cash (relating to revenue recorded in the previous month.) Purchased computer equipment for kr 33,000 on account. Purchased supplies worth of kr 14,000 on account. Paid kr 12,500 cash for a 12-month insurance policy which became effective on January 1st. Performed services for a client who already paid kr 17,000 in advance last month. All services relating to this payment are now completed. Paid kr 1,500 cash for a utility bill. This related to December utilities that were accrued at the end of December. A client purchased a service for kr 10,000. The client pays with credit card and the credit card company charges a 2% fee. The board of directors announced a cash dividend of kr 120,000 on December 15th. The stock goes ex-dividend today. Cash payment for semi-monthly salaries of kr 100,000. Performed services worth kr 40,000 and received cash. Paid a bill of kr 10,000 for advertising services received during December. The invoice was dated December 15 and is recorded in the previous month. Recognized kr 12,000 of revenue relating to a previous cash advance payment. Received kr 25,000 cash from customers who were billed in December Shareholders invested kr 4,000,000 cash in the company in exchange for 80,000 ordinary shares. The shares have a par value of kr 10 per share. 11 12 15 16 18 19 00 20 22 25 30 31 33 3 31 31 31 31 31 The utility bill for January arrives. Amount owed equals kr 13,500 and is payable by February 15. LMK has performed additional services of kr 150,000 to (another new) client who was not billed before January 31. Make the corresponding adjustment. Make an adjustment to prepaid insurance. Make an adjustment to prepaid rent. Make an adjustment to supplies used, amounting to kr 3,050. Make an adjustment to unpaid salaries, amounting to kr 100,000. Make an adjustment to equipment depreciation (for equipment purchased on January 2). The equipment has a 7-year useful life and an estimated residual value of kr 100,000. Use the straight-line method to compute monthly depreciation expense. Make an adjustment for accrual of interest on the bond. Make an adjustment for expected losses on accounts receivable. Assume that the balance on outstanding account receivables (ARS) is kr 130,000 and that 4% of ARS become uncollectible. 31 31 w Chart of accounts: XYZ's chart of accounts includes: Cash; Accounts receivable; Supplies; Prepaid rent; Prepaid insurance; Equipment; Land; Intangible Assets; Goodwill; Allowance for doubtful accounts; Accumulated depreciation equipment; Share capital - Ordinary: Share premium - Ordinary: Treasury shares; Share Premium - Treasury; Bonds payable; Accounts payable; Notes payable; Unearned revenue; Salaries and wages payable; Dividend payable; Interest payable: Revenue; Advertising expense; Bad debt expense; License expense; Depreciation expense; Service charge expense; Interest expense; Insurance expense; Rent expense; R&D expense; Utilities expense; Salaries and wage expense; Supplies expense; Cash dividend