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Part I Erin Company provides home decoration services. The following transactions occurred during 2018. Prepare Journal entries for the Transactions below: January 1- Purchased a new machine for $45.000 cash. February 15 - Purchased supplies on account for $4,000. Mar. 5. Paid $1,000 cash for supplies purchased on Feb. 15. April 1 - Received $26,000 cash in advance for services to be performed monthly over the coming year. April 20- Purchased land and a building for $68.000 cash. (The building was valued at $25.000) April 30-The bank statement for April included the collection of a note receivable for the company for $450. May 1- Borrowed $55,000 cash from the bank with annual interest rate of 3.5%. May 30- Purchased inventory costing $9,800 on account from Harris Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $200 were paid in cash June 1- Returned $1,800 of the inventory that it had purchased on May 30 because the inventory was damaged in transit. The seller agreed to pay the return freight cost. June 5. Paid the amount due on its account payable to Harris Company. (See May 30) June 20- Sold inventory to Customer X that had cost $4,000 for $6,300. The sale was on account under terms 3/10, n/45. (Sales & Cost of goods sold entries) August 4 - Collected the amount due on accounts receivable from the June 20th sale. October 1 - Sold inventory to Customer V that had cost $950 for $2,700 cash. Sales tax of 7% is collected. (Sales & Cost of goods sold entries) November 10- Sold the land and building for $63,000 cash (no depreciation was taken on the building). December 31 - Took a physical count indicating that $2.500 of inventory was on hand at the end of the accounting period. December 31. Recognized services that were performed over the year. (See April 1) December 31. Recognized accrued interest for the year on the $55,000 borrowed from the bank (See May 1) December 31- Adjusted the records to reflect the use of the machine purchased on January 1, 2018. The machine has an expected life of five years and an estimated salvage value of $5,000. Use straight-line depreciation. December 31. Using previous sales data, Williams Company estimated their warranty claims to be 1% of total sales ($10,000). December 31. During the year, they paid $120 to fix defective merchandise of which customers filed warranty claims December 31- Estimate uncollectible accounts to be 4% of receivables, which totaled $ 16,000. Part 1: Prepare 4 financial statements using trial balance and other information (next page), TRIAL BALANCE December 31, 2018 Accounts Receivable $37,020 Accumulated Depreciation - Bldg. $32,350 Advertising Expense 18,500 Alarms Sales 126,000 Allowance for Doubtful Accounts $2,985 Bonds Payable 50,000 Building 125,000 Cash 229,710 Common Stock 90,000 Cost of Goods Sold 64,620 Credit Card Expense 2,320 Depreciation Expense 4,275 Discount on Bonds Payable 600 Dividends Employee Income Tax Payable 1.400 Equipment 9,000 FICA - Medicare Tax Payable 240 FICA - Social Security Tax Payable 960 Interest Expense 9,693 Land 25,000 Maintenance Expense 75 Merchandise Inventory 8,680 Monitoring Service Revenue 125,000 Note Payable 85,017 Office Supplies Expense 15 Payroll Tax Expense 8,145 Petty Cash 100 Preferred Stock 52.000 Retained Earnings 124,816 Salaries Expense 96,000 Sales Tax Payable 1.050 Supplies 190 Supplies Expense Uncollectible Accounts Expense 520 Unemployment Tax Payable 1.993 Utilities Expense Van 6.100 Warranty Expense 27.000 Warranty Payable Total 1.813 S694 576 $694,576 04 Journal Entries DATE ACCOUNTS DEBIT CREDIT Jan ! Feb 15 Mars Apr1 Apr 20 Apr 30 May 1 May 30 Jun Jun 5 Nov 10 Journal Entries (Part 1. con't) CREDIT DEBIT DATE ACCOUNTS Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31

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