Develop Journal Entries In Proper Format For All ✓ Solved

Develop journal entries, in a proper format, for all of the accounting transactions in January for Fishy Farm

Develop journal entries, in a proper format, for all of the accounting transactions in January for Fishy Farm.

Sample Paper For Above instruction

Introduction

Fishy Farm, a small business specializing in freshwater fish hatchery operations, requires accurate accounting to monitor its financial health and support decision-making. During January 20x1, several transactions took place, including purchases, sales, and payments. Proper journal entries must be recorded to reflect these activities in accordance with generally accepted accounting principles (GAAP). This paper provides comprehensive journal entries for all transactions during January, illustrating their effect on Fishy Farm's accounting records.

1. Purchase of equipment

JB purchased a new water filtration system costing $16,000, paying 10% down and financing the rest via an 8% interest note over five years.

• Cash Down Payment: $1,600 (10% of $16,000)
• Note Payable: $14,400 (the remaining balance)

Journal Entries:

Dr. Equipment.........................................$16,000
Cr. Cash........................................$1,600
Cr. Notes Payable.................................$14,400

2. Sale of fish to the Virginia state

Sale of 20,000 fish for $14,250 with a cost of $6,800.

Dr. Cash............................................$14,250
Cr. Sales Revenue............................$14,250
Dr. Cost of Goods Sold..............................$6,800
Cr. Inventory..................................$6,800

3. Collection from Frank's Fishing Pond

Collection of $1,200 for previous sale, with fish cost of $500.

Dr. Cash............................................$1,200
Cr. Accounts Receivable......................$1,200
Dr. Cost of Goods Sold..............................$500
Cr. Inventory..................................$500

4. Collection of advance payment from Premier Game Fish

Received $700 for bass fish to be sold in March, with a fish cost of $250.

Dr. Cash............................................$700
Cr. Unearned Revenue........................$700
Dr. Unearned Revenue.................................$700
Cr. Sales Revenue.............................$700
Dr. Cost of Goods Sold..............................$250
Cr. Inventory..................................$250

5. Depreciation expense for January

Depreciation on vehicle ($100), building ($750), fish tanks ($900), and equipment ($500).

Dr. Depreciation Expense - Vehicle.................$100
Dr. Depreciation Expense - Building................$750
Dr. Depreciation Expense - Fish Tanks..............$900
Dr. Depreciation Expense - Equipment...............$500
Cr. Accumulated Depreciation - Vehicle......$100
Cr. Accumulated Depreciation - Building.....$750
Cr. Accumulated Depreciation - Fish Tanks...$900
Cr. Accumulated Depreciation - Equipment....$500

6. Payment of utility bill from December

$440 utility bill paid in cash.

Dr. Utilities Expense.................................$440
Cr. Cash........................................$440

7. Payment of monthly expenses (salary, insurance, food supplies, etc.)

• Salary of $3,550 paid in cash
• Property insurance of $300
• Medical insurance of $1,250
• Fish food supplies ($3,300)
• Utility bill ($520)
• Advertising used ($150)

Dr. Salaries Expense.................................$3,550
Dr. Insurance Expense.................................$300
Dr. Medical Insurance Expense.........................$1,250
Dr. Supplies Expense..................................$4,650 (includes fish food supplies & advertising)
Dr. Utilities Expense.................................$520
Cr. Cash........................................$10,270

8. Payment of long-term note; interest and principal

Paid $1,000 on the note payable; $800 of which was interest, and $200 reduces principal.

Dr. Notes Payable...................................$200
Dr. Interest Expense................................$800
Cr. Cash......................................$1,000

9. Payment of mortgage principal and interest

Paid $1,500 with $300 applying to principal and interest of $1,200.

Dr. Mortgage Payable.................................$300
Dr. Interest Expense................................$1,200
Cr. Cash......................................$1,500

10. Sale on account to West Virginia

Sale of 6,000 fish for $5,000; cost $2,000.

Dr. Accounts Receivable...............................$5,000
Cr. Sales Revenue.............................$5,000
Dr. Cost of Goods Sold.................................$2,000
Cr. Inventory..................................$2,000

11. Purchase of baby bass from Game Fish Breeders

Inventory of 10,000 baby bass at $1,400.

Dr. Inventory........................................$1,400
Cr. Accounts Payable.........................$1,400

12. Sale of fish to West Virginia

Sale of $5,000 with fish cost of $2,000.

Dr. Accounts Receivable............................$5,000
Cr. Sales Revenue............................$5,000
Dr. Cost of Goods Sold..............................$2,000
Cr. Inventory................................$2,000

13. Collection of accounts receivable

From previous sales, collection of $1,200 from Frank's Fishing Pond.

Dr. Cash............................................$1,200
Cr. Accounts Receivable......................$1,200

Conclusion

The journal entries presented above reflect the financial transactions for Fishy Farm during January 20x1. These entries ensure accurate recording of sales, purchases, expenses, and other activities, providing the foundation for preparing the financial statements and analyzing the company's financial health.

References

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• Gelman, G. (2017). Accounting Principles: A Business Perspective. Wiley.
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• AccountingTools. (2021). Journal Entries Definition & Examples. https://www.accountingtools.com
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