On February 1, 2017, a new software development firm engaged inan initial public offering...

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Accounting

On February 1, 2017, a new software development firm engaged inan initial public offering in which it raised $495,000 in capitaland issued 30,000 shares of $1 par value common stock.
On March 1, the firm purchased a small building to locate itsoperations, by paying 20% of the $300,000 purchase price andfinancing the balance with a note payable. The firm accruesinterest on the note at the end of each quarter at a rate of 5%,and pays interest on the first day of the next quarter. The firmdepreciates the building at the end of the reporting period usingstraight-line depreciation. The estimated salvage value is 50,000and the estimated useful life of the building is 30 years.
On March 5, the firm purchases another development company for$60,000, acquiring a new software patent valued at 100,000,accounts payable of $10,000, and compensation payable of$30,000.
On April 1, the firm sells software on account, amounting to$62,500. The customer pays the firm $62,500 on April 30.
The firm hires a new coder at an annual salary of $160,000 onJuly 1, 2017. The firm pays the coder quarterly (October 1, 2017and January 1, 2018).
On July 1, the firm enters into an agreement to provide updatesto its software on a quarterly basis and receives an advancepayment of $25,000 for Q3 and Q4 of 2017.
On August 15, the company hires another new coder, who will bepaid upon completion of a new software project.
On September 1, the company purchases new computer systems forthe new software project at a cost of 30,000. The companydepreciates the computer at the end of the reporting period usingstraight-line depreciation. The computer systems are estimated tohave zero salvage value and a useful life of 5 years. The companyprovides software updates pursuant to its July 1 agreement onSeptember 30 for q3 2017.
On November 20, the company makes new sales on account in theamount of $52,500.
On December 1, customers pay $25,000 of sales on account. Thecompany provides software updates pursuant to its July 1 agreementon December 30 for q4, 2017.
On December 31, the company records an appropriate amount ofincome tax expense based on a statutory rate of 24% and taxes dueon March 15, 2018.
REQUIREMENTS:
PART1: Record (journalize) transactions and other events . Theentity will prepare annual financial statements. However, someadjusting entries will be made quarterly, and at the end of thecompany's reporting year. Be sure to include all quarterly orannual adjusting entries as noted.
PART II: Post all journal/adjusting entries to t-accounts anddetermine t-account balances -use the date of the journal entry asthe ID for the t-account postings.
PART III: Prepare one trial balance (post-end of year adjustingentries)
Part IV: Prepare financial statements (balance sheet, incomestatement, and statement of retained earnings).
Part V: Prepare closing entries.

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JOURNAL ENTRIES IN BOOKS OF NEW SOFTWARE DEVELOPMENT COMPANY DATE PARTICULARS DEBIT CREDIT 01022017 CashBank Account Dr To Equity Share Capital Account To Security Premium Account Being issue of 30000 equity shares at par value of 1 per share and balance premium on shares 495000 30000 465000 01032018 Building Account Dr To Cash Bank Account To Bills Payable Being purchase of building by paying 20 of value and balance raising accounts payable 5 interest pa payable quarterly 300000 60000 240000 05032017 Software Patent Account Dr To Account Payable account To Compensation Account To CashBank Account Being purchase of company with assets and liabilities and balance payment 100000 10000 30000 60000 31032017 Interest Account Dr To Interest Payable Being interest accurred for one month payable quarterly on 240000 5 pa 4000 4000 01042017 Interest Payable See Answer

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Transcribed Image Text

In: AccountingOn February 1, 2017, a new software development firm engaged inan initial public offering in...On February 1, 2017, a new software development firm engaged inan initial public offering in which it raised $495,000 in capitaland issued 30,000 shares of $1 par value common stock.On March 1, the firm purchased a small building to locate itsoperations, by paying 20% of the $300,000 purchase price andfinancing the balance with a note payable. The firm accruesinterest on the note at the end of each quarter at a rate of 5%,and pays interest on the first day of the next quarter. The firmdepreciates the building at the end of the reporting period usingstraight-line depreciation. The estimated salvage value is 50,000and the estimated useful life of the building is 30 years.On March 5, the firm purchases another development company for$60,000, acquiring a new software patent valued at 100,000,accounts payable of $10,000, and compensation payable of$30,000.On April 1, the firm sells software on account, amounting to$62,500. The customer pays the firm $62,500 on April 30.The firm hires a new coder at an annual salary of $160,000 onJuly 1, 2017. The firm pays the coder quarterly (October 1, 2017and January 1, 2018).On July 1, the firm enters into an agreement to provide updatesto its software on a quarterly basis and receives an advancepayment of $25,000 for Q3 and Q4 of 2017.On August 15, the company hires another new coder, who will bepaid upon completion of a new software project.On September 1, the company purchases new computer systems forthe new software project at a cost of 30,000. The companydepreciates the computer at the end of the reporting period usingstraight-line depreciation. The computer systems are estimated tohave zero salvage value and a useful life of 5 years. The companyprovides software updates pursuant to its July 1 agreement onSeptember 30 for q3 2017.On November 20, the company makes new sales on account in theamount of $52,500.On December 1, customers pay $25,000 of sales on account. Thecompany provides software updates pursuant to its July 1 agreementon December 30 for q4, 2017.On December 31, the company records an appropriate amount ofincome tax expense based on a statutory rate of 24% and taxes dueon March 15, 2018.REQUIREMENTS:PART1: Record (journalize) transactions and other events . Theentity will prepare annual financial statements. However, someadjusting entries will be made quarterly, and at the end of thecompany's reporting year. Be sure to include all quarterly orannual adjusting entries as noted.PART II: Post all journal/adjusting entries to t-accounts anddetermine t-account balances -use the date of the journal entry asthe ID for the t-account postings.PART III: Prepare one trial balance (post-end of year adjustingentries)Part IV: Prepare financial statements (balance sheet, incomestatement, and statement of retained earnings).Part V: Prepare closing entries.