Mobile Corporation Had the Following Transactions for the Month of January

question 88

Essay

Mobile Corporation had the following transactions for the month of January. Record these transactions along with explanations. If no entry is required, state "No Entry."
a. Issued 10,000 shares of no-par common stock for $250,000.
b. Signed an agreement with CompuSource to purchase three new computers costing a total of $6,000 in 10 days. Computers will be used by employees of Mobile.
c. Purchased office furniture for $70,000 on account from Birmingham Company.
d. Purchased a two-year insurance policy for $3,600. Paid cash. This policy will become effective February 1.
e. Paid $1,500 in office rent for the month of January.
f. Accepted delivery of the new computers and paid cash.
g. Paid wages of $5,000 to employees.
h. Provided services on account for $80,000.
i. Paid $50,000 to Birmingham Company on account.
j. Received payment in full from customers in part (h).
k. Paid an electricity bill for $325.

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Definitions:

Work In Process Inventory

Goods that are in the process of being manufactured but are not yet completed in a company’s inventory.

Direct Labor

Costs associated with the work of employees directly involved in the production of goods or services.

Materials Requisition Slips

Documents used to request and authorize the release of materials from a storage area to production.

Inventory Costing Methods

Inventory costing methods are accounting principles used to value inventory, such as First In, First Out (FIFO), Last In, First Out (LIFO), and weighted average cost.