At the start of 2021, Henry opened an interior design business. The following were transactions related to the business for January 2021:
Jan 1 Henry invested $250,000 in the business.
Jan 1 Paid $30,000 for three month’s rent in advance.
Jan 1 Borrowed $120,000 and signed a three-year 10% p.a. note payable. The interest is payable at the end of each year.
Jan 1 Bought equipment for $48,000 and a motor vehicle (MV) for $130,000.Financial and Managerial Accounting Homework help
The equipment is depreciated using the double-declining balance method while the motor vehicle is depreciated using the straight-line method.
Other details include:
Useful Life Residual Value ($)
Equipment 4 years 5,000
MV 10 years 10,000
Jan 5 Bought $5,000 of supplies agreeing to pay by next month.
Jan 15 $1,000 worth of supplies were defective. Henry returned them to the supplier and received full credit for their cost.
Jan 20 Signed a Letter of Intent to buy new equipment costing $88,000. No deposit was made. The new equipment will be delivered in March 2021.
Jan 28 A customer prepaid $28,000 for services to be performed next month.
Jan 31 Paid $1,200 for the miscellaneous expense.
Jan 31 Worker’s salaries of $8,000 have yet to be paid.
Note: No entry was made on the above transactions.
Analyze the above and record the relevant entries for January 2021.