January 2—Paid Mass Media $4,200.00 for prepaid advertising inlocal newspapers for the
next 12 months.
January 2—Paid Pierce Properties $2,750.00 for January rent. Ofthis amount, 25% is for office
facilities and 75% is for factory facilities.
January 2—Paid Owen's Insurance $6,000.00 for prepaid insurance forthe first quarter of the year.
January 3—Received a check from Horsfield Happy Ice Cream aspartial payment on account in
the amount of $5,000.00.
January 3—Paid Rockaway Metal the balance of $2,873.00 onaccount.
Narrative of Transactions
January 2—Paid Mass Media $4,200.00 for prepaid advertising inlocal newspapers for the
next 12 months.
January 2—Paid Pierce Properties $2,750.00 for January rent. Ofthis amount, 25% is for office
facilities and 75% is for factory facilities.
January 2—Paid Owen's Insurance $6,000.00 for prepaid insurance forthe first quarter of the year.
January 3—Received a check from Horsfield Happy Ice Cream aspartial payment on account in
the amount of $5,000.00.
January 3—Paid Rockaway Metal the balance of $2,873.00 onaccount.
January 10—Receive a check from Horsfield Happy Ice Cream aspartial payment on account in
the amount of $5,000.00.
January 10—Receive a phone bill in the amount of $1,402.22 fromUnique Telephone Systems
on account.
January 15—Paid Liberty Bank $2,535.79 for December payroll taxespayable for the amounts of
FWT Payable, $1,613.11; FICA Tax Payable, $822.68.
January 15—Assign Job 76 to Cold Refrigeration for the purchase ofa refrigeration system. The start date will be January 16th. Thecompletion date will be no later than February 28th. The estimateddirect material is $9,175.00. The estimated indirect material is$1,860.00. The estimated
direct labor is $15,600.00. The contract amount is $45,800.00.Adeposit of $10,000.00 was provided by Cold Refrigeration in signingthe contract. The deposit is unearned revenue. Half of the
contract will be billed upon 50% completion with the depositapplied against that billing with the remaining amount dueimmediately. A quarter of the contract will be billed upon 75%completion
of the contract with the amount due immediately. The remainingamount of the contract is to be billed when the job is 100%complete and is payable within 30 days of the billing.
January 16—Purchased $4,441.00 of factory supplies from JohnstonEquipment paid in cash.
January 16—Purchased $2,965.00 of direct materials from SmithSynthetics on account.
January 16—Purchased $427.50 of office supplies from OfficeMax onaccount.
January 19—Apply from direct materials requisition $2,800.00 ofdirect materials. Apply from indirect materials requisition $325.00of indirect materials. Apply from time cards s $7,950.00 of directlabor to Job 74 completing the job.Applied factory overhead isbased on 25% of direct labor cost. Transfer the completed job tothe COGS account from Direct Material and Indirect Material andFactory Overhead accounts. When making the journal entry forapplying direct labor debit COGS for the gross pay and credit FWTPayable and FICA Tax Payable for the appropriate amounts with thenet pay going to Salaries Payable.
January 20. —Paid the electric bill from Susquehanna Electric inthe amount of $2,356.21 for the month of December. Allocate 30% toFactory Overhead
January 20—Paid the FUTA Tax Payable for the previous year.
January 20—Paid the SUTA Tax Payable for the previous year.
January 23—Ashman Alcove Designs paid the balance on account.
January 27—Paid O-Ring Enterprises the balance owed onaccount.
January 27—Paid post office $300.00 cash for postage added topostage meter
January 28—Apply from direct materials requisition $4,600.00 ofdirect materials. Apply from indirect materials requisition $950.00of indirect materials. Apply $8,000.00 (from time cards) of directlabor and factory overhead to Job 76 irect materials. Apply$8,000.00 (from time cards) of direct labor and factory overhead toJob 76, completing 50% of the job. Factory overhead is based on 25%of direct labor cost. Transfer the partially completed job fromDirect Material and Indirect Material to WIP. When making thejournal entry for applying direct labor, debit WIP for thegross
pay and credit FWT Payable and FICA Tax Payable for the appropriateamounts with the net pay going to Salaries Payable. Set up theaccounts receivable and bill Cold Refrigeration for 50% of
the contract on account, applying the initial $10,000.00 depositagainst the billing.
January 29—Received a check from Cold Refrigeration in the amountof $9,976.25 on account.
January 31—Received the following data for the monthlypayroll:
Direct labor (already recorded) $19,600.00
Sales commission 5,132.50
Officers' salaries 5,000.00
Office salaries 1,920.00
Record the monthly payroll. Direct labor payroll has already beenrecorded, as it was incurred in January. Debit other salary expenseaccounts for the appropriate amounts; credit FWT Payable for 15% ofgross pay; credit FICA Tax Payable for 7.65% of gross pay; andcredit Salaries Payable for the net pay. Record the payroll taxesimposed on the employer for all personnel for the month of January.(Prepare the "Schedule of Employer Payroll Taxes Allocation" usingthe appropriate tax rates.)
January 31—Received a check from Messina Missions for the balanceon account
January 31—Received a check from Horsfield Happy Ice Cream for theremaining balance on account.
January 31—Paid all employee wages earned in January.

3. Post the general journal entries to the General Ledger,
the Accounts Receivable Ledger, and the Accounts Payable
Ledger. Use the Post Ref. column to ensure that each line
item of the journal entries is posted correctly to each
general ledger account. Posting from the journal to the
ledger is nothing more than rearranging the information;
however, focus and concentrate because it's easy to make
a mistake.
1. Prepare a Balance Sheet
2. Prepare an Income Statement   
3. Prepare a Trial Balance