Practice Data
The following transactions took place during the remainder of the fiscal year which ended August 31, 1916, and are to be entered as of the given date:
January 3. A one year’s insurance policy at a cost of $250 cash was taken out on a stock of merchandise which had been removed to a warehouse, as stated below.
February 1. The accrued taxes of $75 at date of purchase of factory site were paid.
March 1. On account of the flourishing condition of the sales, an interim dividend of 4% was declared and paid. Noble’s was applied as a partial payment on his stock note.
June 15. The Boston Office Co. sent $5,000 of office specialties to be sold on a 5% commission basis for their account.
July 1. A statement of affairs was received from Jno. Bach & Sons showing their insolvency and copy of an agreement signed by several creditors to accept settlement of all claims on a 40% basis. Your attorney, having been unable to collect and having investigated, advised the acceptance by you of their offer. Accordingly on July 27, a check was received from Bach & Sons for 40% of the balance as shown by your books. (Charge Jackson, Edwards, Hansen with 60% of $169.36, the part guaranteed by them, and Reserve for Doubtful Accounts with 60% of $256.25.)
On August 15, 1916, the factory building was completed. The following expenditures had been made: for steel, concrete, brick and other materials $15,740.20; for labor of all sorts $11,579.35; for insurance, injuries incurred during construction, legal expense in defense, and interest on moneys borrowed for the building fund, $750; J. T. Noble’s salary $2,000; I. M. Builder’s fees and commission $1,113.51; and Builders’ Testing Laboratories $250. The factory was largely of concrete and numerous tests were necessary. Several purchases of cement had been returned as not being of the required standard. The company’s note for $10,000 had been discounted for $9,800 and the proceeds placed in the Building Fund to finance the undertaking. The $200 discount is included in the $750 mentioned above.
Noble reported that orders for machinery and equipment had been placed with sundry firms and that about three months would be required before the machinery could be placed and ready for operation as some of the machines were of delicate and complex construction and would require careful testing before acceptance. He suggested that orders for the raw materials used in the manufacture of the Knoxfraud be now placed to take advantage of a low market. Accordingly $10,000 worth was ordered, an advance payment of $2,500 being made on August 25 and charged to New Method Manufacturing Co. in the sales ledger to show our claim against them for the prepayment—the balance to be paid when delivery is made, not earlier than October 31.
Due to lack of floor space in the sales department and the necessity of carrying a large assortment of styles in stock at all times, on January 2, 1916, a warehouse was rented nearby for a monthly rental of $100 payable in advance. Under date of August 31, 1916, enter a payment of $900.