Reference no: EM13841089

1. On January 2, each company issued 3,200 sillk'"es of capital stock for $160,000 and commenced operations.

2. On. January 2, each company borrowed $400,000 on a 20-year, 7 percent note payable. Interest plus $20,000 principal is due September 30 each year, beginning 2015.

3. On January 3, each company purchased land and a building for $420,000. Both managers assigned $70,000 to the land and $350,000 to the building. Each company paid cash for the land and building.

4. On January 5, each company purchased delivery equipment at a cost of $80,000. Both purchases were made with cash.

5. Each company sells one model of home heating unit, and made the following credit purchases during the year. (youmay record all the purchases in one transaction.)

6. Each company sold 160 units for $398,500 during the year. All sales were on credit; 90 days, same as cash. You will just record the sales piece of this transaction for now. Management has not yet determined how inventory and cost of goods sold will be valued. Therefore, this year, management will use the periodic inventory system and record cost of goods sold at the end of the year (in Part B).

7. $299,100 was collected during the year on the sales described in Transaction 6 above.

8. $213,360 was paid on the purchases made in Transaction 5 above.

9. On September 30, the first $20,000 principal payment plus nine months' interest was made on the note payable described inTransaction 2.

10. A total of $34,200 was paid for a variety of expenses, such as advertising, supplies, insurance, and wages. These expenses are recorded in an account called "other operating expenses." lLDividends of $725 per share were paid to the stockholders on December I.

12. management madeadjusting entry to accrue three months' interest on the note payable in Transactions 2 and 9 above.