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(Transaction Analysis–Service Company)
Christine Ewing is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred.
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April 2 |
Invested $ 3 5,19 7 cash and equipment valued at $18,933 in the business. |
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| 2 |
Hired a secretary-receptionist at a salary of $290 per week payable monthly. |
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| 3 |
Purchased supplies on account $7 12 . (Debit an asset account.) |
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| 7 |
Paid office rent of $684 for the month. |
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|
11 |
Completed a tax assignment and billed client $1,555 for services rendered. (Use Service Revenue account.) |
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| 12 |
Received $3,483 advance on a management consulting engagement. |
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|
17 |
Received cash of $3,043 for services completed for Ferengi Co. |
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|
21 |
Paid insurance expense $17 1. |
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|
30 |
Paid secretary-receptionist $1,668 for the month. |
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|
A count of supplies indicated that $209 of supplies had been used. |
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Purchased a new computer for $6,135 with personal funds. (The computer will be used exclusively for business purposes.) |
Journalize the transactions in the general journal.
(If no entry is required, enter No entry as the account and 0 for the amount. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5,
2.
)
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Date |
Description/Account |
Debit |
Credit |
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Apr. 2 |
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| Apr. 2 | |||||||||||||||||||
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Apr. 3 |
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Apr. 7 |
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Apr. 11 |
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Apr. 12 |
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Apr. 17 |
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Apr. 21 |
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Apr. 30 |
(Corrected Trial Balance)
The trial balance of Geronimo Company does not balance. Your review of the ledger reveals the following: (a) Each account had a normal balance. (b) The debit footings in
Prepaid Insurance
,
Accounts Payable
, and
Property Tax Expense
were each understated $1,000. (c) A transposition error was made in
Accounts Receivable
and Service Revenue; the correct balances for Accounts Receivable and Service Revenue are $2,750 and $6,690, respectively. (d) A debit posting to
Advertising Expense
of $300 was omitted. (e) A $3,321cash drawing by the owner was debited to
Geronimo, Capital
, and credited to
Cash
.
|
GERONIMO COMPANY |
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|
Trial Balance |
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|
April 30, 2012 |
|||||
| Cash |
$2,219 |
||||
| Accounts Receivable |
2,570 |
||||
| Prepaid Insurance |
893 |
||||
|
Equipment |
$8,119 |
||||
| Accounts Payable |
4,693 |
||||
|
Property Tax Payable |
753 |
||||
| Geronimo, Capital |
11,319 |
||||
| Service Revenue |
6,960 |
||||
|
Salaries Expense |
4,081 |
||||
| Advertising Expense |
1,293 |
||||
| Property Tax Expense |
800 |
||||
|
$18,769 |
$24,931 |
Prepare a correct trial balance.
(If answer is zero, please enter 0, do not leave any fields blank.)
|
$ |
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|
Geronimo, Drawing |
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(Corrected Trial Balance)
The trial balance of Scarlatti Corporation does not balance.
|
SCARLATTI CORPORATION |
||
|
$6,037 |
||
|
5,240 |
||
|
Supplies on Hand |
3,092 |
|
|
Furniture and Equipment |
6,100 |
|
|
$7,044 |
||
|
Common Stock |
8,125 |
|
|
Retained Earnings |
2,125 |
|
|
5,200 |
||
|
Office Expense |
4,320 |
|
|
$24,789 |
$22,494 |
An examination of the ledger shows these errors.
| 1. |
Cash received from a customer on account was recorded (both debit and credit) as $1,380 instead of $1,830. |
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|
The purchase on account of a computer costing $3,682 was recorded as a debit to Office Expense and a credit to Accounts Payable. |
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|
3. |
Services were performed on account for a client, $2,250, for which Accounts Receivable was debited $2,250 and Service Revenue was credited $22 5. |
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|
4. |
A payment of $95 for telephone charges was entered as a debit to Office Expenses and a debit to Cash. |
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| 5. |
The Service Revenue account was totaled at $5,200 instead of $5,280. |
From this information prepare a corrected trial balance.
(If answer is zero, please enter 0, do not leave any fields blank.)
(Adjusting Entries)
The ledger of Chopin Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.
|
$3,600 |
||
| Supplies |
2,800 |
|
|
25,000 |
||
|
Accumulated Depreciation-Equipment |
$8,400 |
|
|
Notes Payable |
20,000 |
|
|
Unearned Rent Revenue |
9,300 |
|
| Rent Revenue |
60,000 |
|
|
Interest Expense |
-0- |
|
|
Wage Expense |
14,000 |
An analysis of the accounts shows the following.
|
The equipment depreciates $349 per month. |
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| 2. |
One-third of the unearned rent was earned during the quarter. |
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|
Interest of $571 is accrued on the notes payable. |
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|
Supplies on hand total $895. |
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|
Insurance expires at the rate of $344 per month. |
Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense;
Insurance Expense
; Interest Payable; and
Supplies Expense
.
(Adjusting Entries)
Stephen King, D.D.S., opened a dental practice on January 1, 2012. During the first month of operations the following transactions occurred.
|
Performed services for patients who had dental plan insurance. At January 31, $780 of such services was earned but not yet billed to the insurance companies. |
|
Utility expenses incurred but not paid prior to January 31 totaled $581. |
|
Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable. The equipment depreciates $486 per month. Interest is $500 per month. |
|
Purchased a one-year malpractice insurance policy on January 1 for $12,000. |
|
Purchased $1,600 of dental supplies. On January 31, determined that $538 of supplies were on hand. |
Prepare the adjusting entries on January 31. Account titles are: Accumulated Depreciation–Dental Equipment; Depreciation Expense; Service Revenue; Accounts Receivable; Insurance Expense; Interest Expense; Interest Payable; Prepaid Insurance; Supplies; Supplies Expense; Utilities Expense; and Utilities Payable.
|
(To record depreciation expense.) |
|
(To record interest expense.) |
(Analyze Adjusted Data)
A partial adjusted trial balance of Safin Company at January 31, 2012, shows the following.
|
SAFIN COMPANY |
|
|
Adjusted Trial Balance |
|
|
January 31, 2012 |
|
|
$970 |
|
|
4,020 |
|
|
Salaries Payable |
$1,070 |
|
Unearned Revenue |
1,020 |
| Supplies Expense |
950 |
| Insurance Expense |
670 |
|
2,070 |
|
|
2,270 |
Answer the following questions, assuming the year begins January 1.
|
(a) |
If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1? |
|
(b) |
If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium of the policy? |
|
(c) |
If $2,770 of salaries was paid in January, what was the balance in Salaries Payable at December 31, 2011? |
|
(d) |
If $1,870 was received in January for services performed in January, what was the balance in Unearned Revenue at December 31, 2011? |
(Prepare Financial Statements)
The adjusted trial balance of Cavamanlis Co. as of December 31, 2012, contains the following.
CAVAMANLIS CO.
Adjusted Trial Balance
December 31, 2012
Account Titles
Debit
Credit
Cash
$19,632
Accounts Receivable
7,580
Prepaid Rent
2,940
Equipment
18,710
Accumulated Depreciation
$5,555
Notes Payable
6,360
Accounts Payable
5,132
Common Stock
20,660
Retained Earnings
11,970
Dividends
3,660
Service Revenue
13,250
Salaries Expense
7,500
Rent Expense
2,663
Depreciation Expense
242
Interest Expense
180
Interest Payable
180
$63,107
$63,107
(a)
Prepare an income statement.
(List multiple entries from largest to smallest amount, e.g. 10, 5, 2.)
CAVAMANLIS CO.
Income Statement
For the Year Ended December 31, 2012
Revenues
$
Expenses
$
Net Income
$
(b)
Prepare a statement of retained earnings.
CAVAMANLIS CO.
Statement of Retained Earnings
For the Year Ended December 31, 2012
$
Add:
Less:
$
(c)
Prepare a classified balance sheet.
(List assets in order of liquidity and liabilities in order from largest to smallest amounts, e.g. 15, 11, 7.)
CAVAMANLIS CO.
Balance Sheet
December 31, 2012
Assets
Current Assets
$
Total current assets
Property, plant, and equipment
$
Less:
Total assets
$
Liabilities and Stockholders’ Equity
Current liabilities
$
Total current liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
$
(Closing Entries for a Corporation)
Presented below are selected account balances for Alistair Co. as of December 31, 2012.
Merchandise Inventory 12 ⁄31 ⁄12
$62,504
Cost of Goods Sold
$228,046
Common Stock
75,077
Selling Expenses
17,381
Retained Earnings
46,013
Administrative Expenses
38,028
Dividends
18,926
Income Tax Expense
32,801
Sales Returns and Allowances
12,430
Sales Discounts
15,203
Sales
412,188
Prepare closing entries for Alistair Co. on December 31, 2012.
(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Description/Account
Debit
Credit
(To close sales account.)
(To close expense accounts.)
(To close net income to retained earnings.)
(To close dividends to retained earnings.)
(Transactions, Financial Statements – Service Company)
Listed below are the transactions of Yasunari Kawabata, D.D.S., for the month of September.
Sep. 1
Kawabuta begins practice as a dentist and invests $24,030 cash.
2
Purchases furniture and dental equipment on account from Green Jacket Co. for $18,960.
4
Pays rent for office space, $840 for the month.
4
Employs a receptionist, Michael Bradley.
5
Purchases dental supplies for cash, $976.
8
Receives cash of $1,770 from patients for services performed.
10
Pays miscellaneous office expenses, $450.
14
Bills patients $5,900 for services performed.
18
Pays Green Jacket Co. on account, $5,480.
19
Withdraws $3,110 cash from the business for personal use.
20
Receives $1,030 from patients on account.
25
Bills patients $3,010 for services performed.
30
Pays the following expenses in cash: office salaries $2,740; miscellaneous office expenses $98.
30
Dental supplies used during September, $430.
Enter the transactions shown above in appropriate general ledger accounts. Use the following ledger accounts: Cash; Accounts Receivable; Supplies on Hand; Furniture and Equipment; Accumulated Depreciation; Accounts Payable; Yasunari Kawabata, Capital; Service Revenue; Rent Expense; Miscellaneous Office Expense; Office Salaries Expense; Supplies Expense; Depreciation Expense; and Income Summary. Record depreciation using a 5-year life on the furniture and equipment, the straight-line method, and no salvage value. Do not use drawing and retained earnings accounts.
(List multiple Income Summary entries in order of expense accounts appearance.)
Cash
Furniture And Equipment
Sep.1
Sep.4
Sep. 2
8
5
20
10
Yasunari Kawabata, Capital
18
Sep.19
Sep. 1
Sep. 30
19
Bal. 30
30
30
Bal. 30
Accounts Payable
Sep. 18
Sep. 2
Accounts Receivable
Bal. 30
Sep. 14
Sep. 20
25
Service Revenue
Bal. 30
Sep. 30
Sep. 8
14
Rent Expense
25
Sep. 4
Sep. 30
Supplies on Hand
Accumulated Depreciation
Sep. 5
Sep. 30
Sep. 30
Bal. 30
Income Summary
Miscellaneous Office Expense
Sep. 30
Sep. 30
Sep. 10
Sep. 30
30
30
30
30
30
Office Salaries Expense
30
Sep. 30
Sep. 30
Supplies Expense
Depreciation Expense
Sep. 30
Sep. 30
Sep. 30
Sep. 30
Prepare a trial balance.
(If answer is zero please enter 0, do not leave any answer blank.)
YASUNARI KAWABATA, D.D.S.
Trial Balance
September 30
Debit
Credit
Cash
$
$
Accounts Receivable
Supplies on Hand
Furniture and Equipment
Accumulated Depreciation
Accounts Payable
Yasunari Kawabata, Capital
Service Revenue
Rent Expense
Miscellaneous Office Expense
Office Salaries Expense
Supplies Expense
Depreciation Expense
Totals
$
$
Prepare an income statement, a statement of owner’s equity, and an unclassified balance sheet.
(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
YASUNARI KAWABATA, D.D.S.
Income Statement
For the Month of September
Revenues:
$
Expenses:
$
Total Expenses
Net Income
$
YASUNARI KAWABATA, D.D.S.
Statement of Owner’s Equity
For the Month of September
$
Less:
$
YASUNARI KAWABATA, D.D.S.
Balance Sheet
As of September 30
Assets
Liabilities and Owner’s Equity
Cash
$
Accounts Payable
Accounts Receivable
Yasunari Kawabata, Capital
Supplies
Furniture and Equip.
Acc. Depreciation
Total liabilities and owner’s equity
Total assets
$
$
Prepare a post-closing trial balance.
(If answer is zero please enter 0, do not leave any answer blank.)
YASUNARI KAWABATA, D.D.S.
Post-closing Trial Balance
September 30
Debit
Credit
Cash
$
$
Accounts Receivable
Supplies on Hand
Furniture and Equipment
Accumulated Depreciation
Accounts Payable
Yasunari Kawabata, Capital
Totals
$
$
