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Financial Account Balance Sheet Question!
10-27-2009, 05:35 AM
Post: #1
Financial Account Balance Sheet Question!
Hi there-

I’m a student taking a basic financial accounting course. I’m not sure if it’s appropriate to ask a question like this here, but I’m having a tough time getting answers elsewhere. I have a mini project due in a couple days where we have been given a list of transactions. Our (the student’s) job is to create a balance sheet, income statement etc. I had what I thought to be the correct journal entries and adjustments, but according to my professor, what I have is wrong. I've managed to complete the other 30, but here are the few giving me some troubles.

The balance sheet with the journal entries using these transactions is for the year ended December 31, 2008. I need the debit, credit and adjustment, if necessary, using the accrual accounting method. The journal entries do not need to be done monthly. Once at the end of the year (December 31) is fine.

January 31, 2008- AAP (Albert’s Auto Parts-fictional company) rented a building for $4,500 per month on a seven year rental contract. Rent is due on the 1st of every month beginning on February 1.

AAP obtained a $60,000 cash loan from Capital Bank. The note has a 6% annual interest rate and requires monthly interest only payments (0.5% per month) on the first day of every month beginning on March 1, 2008. The loan is due to be paid in full in two years.

March 1- AAP made its first monthly interest payment to Capital Bank for the $60,000. Don’t forget to do the rest of the months (the journal entry can take into consideration the 1st of every month up until December—remember, once is fine—not monthly).

October 19- AAP signed a contract with an auto parts retailer to provide 10,000 oil filters on the first of every month for 6 months beginning on November 1. AAP collected the total sales price for all six month’s worth of oil filters when the contract was signed for a total of $360,000. The filters cost $4 each.

Let me know if you think I am missing some information.

Thanks a lot!
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