accounting cycle review problem part 2

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THIS IS YEARS THREE AND FOUR

(A CONTINUATION OF THE PREVIOUS PROBLEM)–

Jones, Inc. Year 2018

During the year, you paid the amounts owed for Widgets at the end of year 2017 and collected all the

amounts owed by customers for 2017. You purchased twelve more Widgets for $4,000 each and at the

same terms as in 2017. During the year you sold 11 Widgets for $8,000 each at the same terms as

2017. On January 1, 2018, you purchased furniture and fixtures for $45,000. You put $15,000 down

and financed the remaining amount at 10%. You will make annual payments on December 31st for

three years that include the interest accrued to date plus $10,000 on the principal each year. You

estimate that you will use them for 10 years and then they will be worth $5,000. On June 30th, you

paid $4,800 for a two-year insurance policy. You paid your worker $8,000 and owed her $2,000 more

at the end of the year. You also paid $13,000 for 13 months of rent. This year you declared and paid a

dividend of $5,000 to your shareholders. On October 1st you issued 10 shares of common stock for

$3,000. On December 31st, you paid the first payment on the furniture and fixtures loan. Also on

December 31st, you paid Mike his interest. You paid the 2017 taxes. The tax rate is 30%. The 2018

taxes will be paid in 2019. You use the FIFO inventory system.

Prepare the Journal Entries, T-accounts, and all four Financial Statements.

Jones, Inc. Year 2019

During the year, you bought 11 more Widgets for $5,000 each and sold 12 for $9,000 each, same terms

as last year. You paid the money owed to suppliers (Accounts Payable) at the beginning of the year

and collected all money due you at the beginning of the year (Accounts Receivable). On January 1st,

you purchased a delivery truck for $30,000. You made a down payment of $10,000 and financed the

balance at 7%. You will make 4 equal payments that include interest @ 7%. You make the first

payment on December 31st of this year. You estimate the truck will last about 6 years and then be

worth $6,000. You paid your worker $14,000 and owed her $3,000 more at the end of the year. You

paid eleven months of rent @ $1,000 per month. On December 31st, you paid the furniture and

fixtures loan payment. Paid Uncle Mike his interest and also paid the principal balance owed on

December 31st. On April 1, 2019, issued 100 shares of common stock for $20,000. The tax rate is still

30% and during 2019 you paid 2018 taxes. Taxes for 2019 will be paid the following year. At the end

of the year, you paid a dividend to shareholders of $8,000.

Prepare the Journal Entries, T-accounts, and all four Financial Statements.

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