Acct 216 Week 6 Homework During March 2013 Jz Inc Completed

Acct216week 6 Homeworkduring March 2013 Jz Inc Completed The Followi

During March 2013, JZ Inc. completed the following transactions: a. 3/1/13 - Purchased a new piece of equipment for $75,000 signing a six month, 7% note payable. b. 3/10/13 – Issued 10,000 shares of $2.00 par stock at $9.00 per share. c. 3/15/13 - Received an invoice for their telephones for $375.00 that will be paid next month. d. 3/16/13 - Sold $450,000 in product sales and accrued 6% for warranty liability. e. 3/30/13 – Received a summons that the company was being sued for terminating the office manager last month. The attorneys have advised the company that they will be liable to the employee for back pay of $4,700. f. 3/31/13 - Purchased 400 shares of Treasury stock at $7.00 per share g. 3/31/13 – Accrued interest on the note signed 3/1/13. Required: 1. Prepare the journal entries for the above transactions.

Paper For Above instruction

Introduction

The financial transactions of a company, such as JZ Inc., must be accurately recorded through journal entries to ensure proper financial reporting and compliance with accounting standards. The following journal entries reflect the company's activities in March 2013, capturing asset acquisitions, issuance of shares, liabilities, sales, legal obligations, treasury stock transactions, and accrued interest, all essential components of sound financial accounting.

Journal Entries for March 2013 Transactions

a. Purchase of Equipment and Note Payable

On March 1, 2013, JZ Inc. purchased equipment for $75,000, financed by a six-month note payable with a 7% annual interest rate. The journal entry records the equipment acquisition and the note payable:

Debit: Equipment $75,000

Credit: Notes Payable $75,000

This entry recognizes the asset acquired and the liability incurred.

b. Issuance of Shares

On March 10, 2013, the company issued 10,000 shares of $2.00 par stock at $9.00 per share, raising capital:

Debit: Cash $90,000 (10,000 shares × $9.00)

Credit: Common Stock ($2.00 par × 10,000 shares) $20,000

Credit: Additional Paid-In Capital $70,000 (difference between cash received and par value)

This reflects the issuance of shares above par value.

c. Invoice for Telephone Services

On March 15, 2013, JZ Inc. received an invoice for telephone services totaling $375 to be paid next month:

Debit: Telephone Expense $375

Credit: Accounts Payable $375

This records the expense and the corresponding liability.

d. Sale of Products and Warranty Liability

On March 16, 2013, the company recorded product sales of $450,000 and accrued warranty liability at 6% of sales:

Debit: Accounts Receivable or Cash $450,000

Credit: Sales Revenue $450,000

For warranty liability:

Debit: Warranty Expense $27,000 (6% of $450,000)

Credit: Warranty Liability $27,000

This captures revenue and potential warranty costs.

e. Legal Liability for Back Pay

On March 30, 2013, the company was notified of a legal claim for back pay of $4,700:

Debit: Legal Expense $4,700

Credit: Accrued Liabilities or Legal Payable $4,700

This records the anticipated liability from the lawsuit.

f. Purchase of Treasury Stock

On March 31, 2013, JZ Inc. purchased 400 shares of its own stock at $7.00 per share:

Debit: Treasury Stock $2,800 (400 shares × $7.00)

Credit: Cash $2,800

This transaction reduces cash and increases treasury stock.

g. Accrued Interest on Note Payable

On March 31, 2013, interest on the note signed on March 1, 2013, is accrued. The interest calculation:

Interest = Principal × Rate × Time = $75,000 × 7% × (30/180) = $875

Assuming a 6-month (180-day) note:

Debit: Interest Expense $875

Credit: Interest Payable $875

This recognizes the interest expense incurred but not paid.

Conclusion

Accurate journal entries for each transaction are vital for maintaining reliable financial statements. They record the company's economic activities, ensuring transparency and compliance. These entries reflect asset acquisition, financing, equity transactions, revenue, liabilities, and expenses, forming the basis for the financial position and performance analysis of JZ Inc. in March 2013.

References

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