Reference no: EM132479927

Question 1: prepare the journal entry for each transaction:

Point a. Noodles issued new shares of common stock for $100,000.

Point b. Inventory costing $93,068 was purchased, all on account.

Point c. Noodles had sales of $347,140 (all in cash) at the company-owned restaurants. The cost of the food products sold at the company-owned cafes was $91,890.

Point d. The company earned royalties and fees from franchisees of $3,785, all on account.

Point e. Noodles paid down long-term debt in the amount of $110,065 with cash.

Point f. Property and equipment in the amount of $50,420 was purchased. Noodles paid $20,420 in cash and signed a promissory note due in 30 months for $30,000.

Point g. Noodles received $4,515 cash from franchisees as payment for amounts previously owed.

Point h. Noodles paid $108,570 in cash for advertising and administrative costs incurred during the year. In addition, wages for restaurant employees was $104,040 in 2013, all paid in cash.

Point i. Noodles compensated certain high level executives who worked for the company in 2013 by issuing new shares of Noodles stock worth $6,575 (i.e., Noodles gave them shares of the company instead of giving them a paycheck for services provided during the year).

Point j. Noodles paid cash for 2013 pre-opening costs (e.g., site selection, training) of $3,810. In addition, late in the fiscal year, the company paid cash of $1,340 for rental deposits for locations that it did not occupy until 2014.

Point k. The company incurred $2,820 in interest expense for 2013, which was fully paid in cash.

Point l. The company paid $2,775 in cash for shares of its own common stock (i.e., it went to the stock market and bought back shares of its own stock.) This is known as treasury stock. Even though it is part of owners' equity, treasury stock has a normal debit balance because it reduces the amount of common stock outstanding.

Point m. Noodles paid vendors $94,288 cash owed for previously delivered supplies.

Point n. Noodles recognized depreciation expense of $21,790. For purposes of this case, depreciation expense reduces property and equipment, net. Next week, we will discuss a separate account called accumulated depreciation.

Point o. Noodles reported income tax expense of $4,765 for 2013. Of this amount, the company made estimated cash payments to the IRS during the year of $3,140 and still owed the balance of $1,625 at year end.