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ACC557 week 2

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ACC557 Week 2: E2-2 E2-3 E2-7 E2-10 P2-3 P2-5
E3-4 E3-8 E3-10 E3-13 P3-2A P3-5A

E2-2 Selected transactions for D. Reyes, Inc., an interior decorating firm, in its first month of business, are as follows.

Jan. 2 Invested $10,000 cash in the business in exchange for common stock.
3 Purchased used car for $4,000 cash for use in business.
9 Purchased supplies on account for $500.
11 Billed customers $1,800 for services performed.
16 Paid $200 cash for advertising.
20 Received $700 cash from customers billed on January 11.
23 Paid creditor $300 cash on balance owed.
28 Declared and paid a $1,000 cash dividend.

E2-3 Data for D. Reyes, Inc., interior decorating, are presented in E2-2.

Instructions
Journalize the transactions using journal page J1

E2-7 Rowand Enterprises had the following selected transactions.
1. Aaron Rowand invested $4,000 cash in the business in exchange for common stock.
2. Paid office rent of $1,100.
3. Performed consulting services and billed a client $5,200.
4. Paid a $700 cash dividend.

E2-10 The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations.



P2-3A Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007 (the end of its fiscal year).


Summarized transactions for January 2008 were as follows:
1. Advertising costs, paid in cash, $1,000.
2. Additional repair parts inventory acquired on account $4,000.
3. Miscellaneous expenses, paid in cash, $2,000.
4. Cash collected from customers in payment of accounts receivable $14,000.
5. Cash paid to creditors for accounts payable due $15,000.
6. Repair parts used during January $4,000. (Hint: Debit this to Repair Parts Expense.)
7. Repair services performed during January: for cash $6,000; on account $9,000.
8. Wages for January, paid in cash, $3,000.
9. Dividends paid in January were $3,000.

P2-5A The Lake Theater opened on April 1. All facilities were completed on March 31. At this time, the ledger showed: No. 101 Cash $6,000; No. 140 Land $10,000; No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $8,000; No. 157 Equipment $6,000; No. 201 Accounts Payable $2,000;No. 275 Mortgage Payable $8,000; and No. 311 Common Stock $20,000. During April, the following events and transactions occurred.

Apr. 2 Paid film rental of $800 on first movie.
3 Ordered two additional films at $1,000 each.
9 Received $2,800 cash from admissions.
10 Made $2,000 payment on mortgage and $1,000 for accounts payable due.
11 Lake Theater contracted with R. Wynns Company to operate the concession stand. Wynns is to pay 17% of gross concession receipts (payable monthly) for the right to operate the concession stand.
12 Paid advertising expenses $500.
20 Received one of the films ordered on April 3 and was billed $1,000. The film will be shown in April.
25 Received $5,200 cash from admissions.
29 Paid salaries $2,000.
30 Received statement from R. Wynns showing gross concession receipts of $1,000 and the balance due to The Lake Theater of $170 ($1,000 17%) for April. Wynns paid one-half of the balance due and will remit the remainder on May 5.
30 Prepaid $900 rental on special film to be run in May.

In addition to the accounts identified above, the chart of accounts shows: No. 112 Accounts
Receivable,No. 136 Prepaid Rentals,No. 405 Admission Revenue,No. 406 Concession Revenue,
No. 610 Advertising Expense, No. 632 Film Rental Expense, and No. 726 Salaries Expense.

Instructions:
(a) Enter the beginning balances in the ledger as of April 1. Insert a check mark (✓) in the reference column of the ledger for the beginning balance.
(b) Journalize the April transactions.
(c) Post the April journal entries to the ledger. Assume that all entries are posted from page 1 of the journal.
(d) Prepare a trial balance on April 30, 2008.

E3-4 Emeril Corporation encounters the following situations:
1. Emeril collects $1,000 from a customer in 2008 for services to be performed in 2009.
2. Emeril incurs utility expense which is not yet paid in cash or recorded.
3. Emeril’s employees worked 3 days in 2008, but will not be paid until 2009.
4. Emeril earned service revenue but has not yet received cash or recorded the transaction.
5. Emeril paid $2,000 rent on December 1 for the 4 months starting December 1.
6. Emeril received cash for future services and recorded a liability until the revenue was earned.
7. Emeril performed consulting services for a client in December 2008. On December 31, it billed the client $1,200.
8. Emeril paid cash for an expense and recorded an asset until the item was used up.
9. Emeril purchased $900 of supplies in 2008; at year-end, $400 of supplies remain unused.
10. Emeril purchased equipment on January 1, 2008; the equipment will be used for 5 years.
11. Emeril borrowed $10,000 on October 1, 2008, signing an 8% one-year note payable.

E3-8 Andy Wright,D.D.S., opened a dental practice on January 1, 2008. During the first month
of operations the following transactions occurred.

1. Performed services for patients who had dental plan insurance. At January 31, $875 of such
services was earned but not yet recorded.
2. Utility expenses incurred but not paid prior to January 31 totaled $520.
3. 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 $400 per month. Interest is $500 per
month.
4. Purchased a one-year malpractice insurance policy on January 1 for $12,000.
5. Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were on
hand.

E3-10 The income statement of Benning Co. for the month of July shows net income of $1,400 based on Service Revenue $5,500,Wages Expense $2,300, Supplies Expense $1,200, and Utilities Expense $600. In reviewing the statement, you discover the following.
1. Insurance expired during July of $400 was omitted.
2. Supplies expense includes $200 of supplies that are still on hand at July 31.
3. Depreciation on equipment of $150 was omitted.
4. Accrued but unpaid wages at July 31 of $300 were not included.
5. Services provided but unrecorded totaled $500.

Instructions: Prepare a correct income statement for July 2008.

E3-13 The trial balances before and after adjustment for Garcia Company at the end of its fiscal
year are presented below.

Garcia Company
Trial Balance
August 31, 2008

Instructions:
Prepare the adjusting entries that were made.

P3-2A Neosho River Resort, Inc. opened for business on June 1 with eight air-conditioned
units. Its trial balance before adjustment on August 31 is as follows.
NEOSHO RIVER RESORT, INC.

and so on ...

P3-5A On September 1, 2008, the account balances of Rand Equipment Repair, Inc. were as
follows.

During September the following summary transactions were completed.
Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September.
10 Received $1,200 cash from customers on account.
12 Received $3,400 cash for services performed in September.

and so on....

Chapter 2: Exercises 2, 3, 7, 10; Problems 3 and 5
Chapter 3: Exercises 4, 8, 10,13; Problems 2 and 5 

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