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ACC290 WEEK 3 BE4-1 P4-2A P4-3A

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Complete Exercise BE4-1.
Complete Problems 4-2A and 4-3A.

BE4-1 Transactions that affect earnings do not necessarily affect cash. Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example.

Net Cash Income
(a) Purchased $100 of supplies for cash. $100
(b) Recorded an adjusting entry to record use of $20 of the above supplies.
(c) Made sales of $1,300, all on account.
(d) Received $800 from customers in payment of their accounts.
(e) Purchased equipment for cash, $2,500.
(f) Recorded depreciation of building for period used, $600.

P4-2A Gil Vogel started his own consulting firm, Vogel Consulting, on June 1, 2012.
The trial balance at June 30 is as follows.


Vogel Consulting
Trial Balance
30-Jun-12
 
Cash   6,850
Accounts Receivable   7,000
Prepaid Insurance   2,880
Supplies   2,000
Office Equipment   15,000
Accounts Payable   4,230
Unearned Service Revenue   5,200
Common Stock   22,000
Service Revenue   8,300
Salaries Expense   4,000
Rent Expense   2,000  
   39,730  39,730

In addition to those accounts listed on the trial balance, the chart of accounts for Vogel
also contains the following accounts: Accumulated Depreciation—Equipment, Utilities
Payable, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities
Expense, and Supplies Expense.
Other data:
1. Supplies on hand at June 30 total $720.
2. A utility bill for $180 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $4,100 of unearned service revenue has been earned at the end of the month.
5. Salaries of $1,250 are accrued at June 30.
6. The equipment has a 5-year life with no salvage value and is being depreciated at
$250 per month for 60 months.
7. Invoices representing $3,900 of services performed during the month have not been
recorded as of June 30.
Instructions
(a) Prepare the adjusting entries for the month of June.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance
as beginning account balances. Use T accounts.
(c) Prepare an adjusted trial balance at June 30, 2012.

P4-3A The Vang Hotel opened for business on May 1, 2012. Here is its trial balance before
adjustment on May 31.


Vang Hotel
Trial Balance
31-May-12
Cash   2,500
Prepaid Insurance   1,800
Supplies   2,600
Land   15,000
Lodge   70,000
Furniture   16,800
Accounts Payable   4,700
Unearned Rent Revenue   3,300
Mortgage Payable   36,000
Common Stock   60,000
Rent Revenue   9,000
Salaries Expense   3,000
Utilities Expense   800
Advertising Expense   500  
   113,000  113,000
Other data:
1. Insurance expires at the rate of $450 per month.
2. A count of supplies shows $1,050 of unused supplies on May 31.
3. Annual depreciation is $3,600 on the building and $3,000 on equipment.
4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)
5. Unearned rent of $2,500 has been earned.
6. Salaries of $900 are accrued and unpaid at May 31.

Instructions
(a) Journalize the adjusting entries on May 31.
(b) Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting
entries.
(c) Prepare an adjusted trial balance on May 31.
(d) Prepare an income statement and a retained earnings statement for the month of
May and a classified balance sheet at May 31.
(e) Identify which accounts should be closed on May 31.

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