2. Prepare the adjusted trial balance for the company.3. Prepare the 2019 company's financial statements for presentation to the bank and to help address the first issue concerning Allan.4. Has the owner's equity grown from its original $40,000 balance? Can Mr. Thorpe expect to get the loan? Give your reasons. Salary expenseDepreciation expenseDec 31 Bal17,000Advertising expenseUtilities expenseDec 31 Bal800Supplies expenseRent expenseApply Your KnowledgeAllan indicates that, at year-end, customers owe him $1,000 accrued service revenue, which he expects to collect earlynext year. These revenues have not been recorded. During the year, he collected $4,100 service revenue in advancefrom customers, but the business has earned only $800 of that amount. During the year he has incurred $2,400 ofadvertising expense, but he has not yet paid for it. In addition, he has used up $2,100 of the supplies. Allan determinesthat depreciation on equipment was $7,000 for the year. At December 31, he owes his employee $1,200 accrued salary.The rent paid in advance on Jan 2 for $2,800 relates to the period January 2019 through to February 2020. The ownermade no capital investments during the year.Allan expresses concern that drawing during the year might have exceeded the business's net income. To get a loan toexpand the business, Allan must show the bank that the business's owner's equity has grown from its original $40,000balance. You and Allan agree that you will meet again in one week.Requirement:1. Prepare the journal entries for the transactions that were not previously recorded, prepare and update the T-accounts and determine the ending balance on all accounts used by the company. Scenario:One year ago, Allan Thorpe founded Alcazar Sales Company, and the business has prospered. Allan comes to you foradvice. He wishes to know how much net income the business earned during the past year. The accounting recordsconsist of the T-accounts in the ledger, which were prepared by an accountant who has resigned from the company. Theaccounts at December 31, are as follows:CashAccounts receivableDec 31 Bal5,800Dec 31 Bal12,300Prepaid rentSupplies2,6002-Jan2,8002-JanAccumulated depreciation- equipmentEquipment52,0002-JanAccounts payableSalary payableDec 31 Bal18,500Unearned service revenueAllan Thorpe, capitalDec 31 Bal4,1002-Jan40,000Allan Thorpe, drawingService revenueDec 31 Bal50,000Dec 31 Bal80,700

2) Particulars Debit Credit Cash $5,800 Accounts Receivable $13,300 Prepaid…

2. Prepare the adjusted trial balance for the company. 3. Prepare the 2019 company's financial statements for presentation to the bank and to help address the first issue concerning Allan. 4. Has the owner's equity grown from its original $40,000 balance? Can Mr. Thorpe expect to get the loan? Give your reasons.

2. Prepare the adjusted trial balance for the company. 3. Prepare the 2019 company's financial statements for presentation to the bank and to help address the first issue concerning Allan. 4. Has the owner's equity grown from its original $40,000 balance? Can Mr. Thorpe expect to get the loan? Give your reasons.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 18EB: Krespy Corp. has a cash balance of $7,500 before the following transactions occur: A. received...

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Domingo Company started its business on January 1, 2019. The following transactions occurred during the month of May. Prepare the journal entries in the journal on Page 1. A. The owners invested $10,000 from their personal account to the business account. B. Paid rent $500 with check #101. C. Initiated a petty cash fund $500 with check #102. D. Received $1,000 cash for services rendered. E. Purchased office supplies for $158 with check #103. F. Purchased computer equipment $2,500, paid $1,350 with check #104, and will pay the remainder in 30 days. G. Received $800 cash for services rendered. H. Paid wages $600, check #105. I. Petty cash reimbursement: office supplies $256, maintenance expense $108, postage expense $77, miscellaneous expense $55. Cash on hand $11. Check #106. J. Increased petty cash by $30, check #107.
Inner Resources Company started its business on April 1, 2019. The following transactions occurred during the month of April. Prepare the journal entries in the journal on Page 1. A. The owners invested $8,500 from their personal account to the business account. B. Paid rent $650 with check #101. C. Initiated a petty cash fund $550 check #102. D. Received $750 cash for services rendered. E. Purchased office supplies for $180 with check #103. F. Purchased computer equipment $8,500, paid $1,600 with check #104 and will pay the remainder in 30 days. G. Received $1,200 cash for services rendered. H. Paid wages $560, check #105. I. Petty cash reimbursement office supplies $200, Maintenance Expense $140, Miscellaneous Expense $65. Cash on Hand $93. Check #106. J. Increased Petty Cash by $100, check #107.
What accounting method (cash or accrual) would you recommend for the following businesses? a. A gift shop with average annual gross receipts of 900,000. b. An accounting partnership with average annual gross receipts of 12 million. c. A drywall subcontractor who works on residences and has annual gross receipts of 3 million. d. An incorporated insurance agency with average annual gross receipts of 28 million. e. A sole proprietor operating a retail clothing store with average annual gross receipts of 12 million. f. A sole proprietor operating a widget manufacturing plant with average annual gross receipts of 27 million.
On March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501. e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012. g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307. i. Received and paid the heating bill, 248, Ck. No. 504. j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128. k. Sold catering services for cash for the remainder of the month, 2,649. l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506. Required 1. Record the transactions and the balance after each transaction. 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.
A business has the following transactions: A. The business is started by receiving cash from an investor in exchange for common stock $10,000. B. Rent of $1,250 is paid for the first month. C. Office supplies are purchased for $375. D. Services worth $3,450 are performed. Cash is received for half. E. Customers pay $1,250 for services to be performed next month. F. $6,000 is paid for a one year insurance policy. G. We receive 25% of the money owed by customers in D. H. A customer has placed an order for $475 of services to be done this coming week. How much total revenue does the company have?
Discuss how each of the following transactions for Watson, International, will affect assets, liabilities, and stockholders equity, and prove the companys accounts will still be in balance. A. An investor invests an additional $25,000 into a company receiving stock in exchange. B. Services are performed for customers for a total of $4,500. Sixty percent was paid in cash, and the remaining customers asked to be billed. C. An electric bill was received for $35. Payment is due in thirty days. D. Part-time workers earned $750 and were paid. E. The electric bill in C is paid.
Lavender Company started its business on April 1, 2019. The following are the transactions that happened during the month of April. Prepare the journal entries in the journal on Page 1. A. The owners invested $7,500 from their personal account to the business account. B. Paid rent $600 with check #101. C. Initiated a petty cash fund $250 check #102. D. Received $350 cash for services rendered. E. Purchased office supplies for $125 with check #103. F. Purchased computer equipment $1,500, paid $500 with check #104, and will pay the remainder in 30 days. G. Received $750 cash for services rendered. H. Paid wages $375, check #105. I. Petty cash reimbursement Office Supplies $50, Maintenance Expense $80, Miscellaneous Expense $60. Cash on hand $8. Check #106. J. Increased Petty Cash by $70, check #107.
Ethics and Cash Flows You are the accountant for Nello Company, which manufactures specialty equipment. Nello has been in financial difficulty, so its suppliers require purchases to he paid in cash. Furthermore, Nello has long-term debt with a debt covenant that requires it to maintain a 1:1 acid-test (quick) ratio. Nellos employees work a 5-day week, Monday through Friday. On Wednesday morning during the last week of the current year, Sam (the production supervisor) comes to you and says, I dont understand it. We have this large special order from a customer that must be delivered at the end of the first week in January. Once we get the raw materials, it is going to take 5 solid days of work without overtime to produce the order. If Bob (the president) would let me order the raw materials this morning, we could have them by late today. This would give us 2 days this week and the 4 days after New Years Day (Monday) of next week to complete the order without incurring overtime costs. But Bob says we must wait until next Tuesday to order the materials. This means we will have to work double time that Wednesday through Friday to finish the order. That overtime cost is going to really increase next years factory salary expense, so our profit and operating cash flows from that order will be very low. Please talk to him. When you approach Bob about buying the raw materials this morning, he says, If we purchase those materials today, we will have to write a check. And that means our cash flow from operating activities for this year will be much lower, which our shareholders wont like. Furthermore, our quick ratio will go down from 1.01:1 to 0.90:1, so our creditors may be upset. I know our profit and operating cash flows for next year will be lower if we delay the purchase, but that seems to be the best decision. Dont you agree? Required: From financial reporting and ethical perspectives, how would you respond to Bob?
Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.
Hajun Company started its business on May 1, 2019. The following transactions occurred during the month of May. Prepare the journal entries in the journal on Page 1. A. The owners invested $5,000 from their personal account to the business account. B. Paid rent $400 with check #101. C. Initiated a petty cash fund $200 check #102. D. Received $400 cash for services rendered E. Purchased office supplies for $90 with check #103. F. Purchased computer equipment $1,000, paid $350 with check #104 and will pay the remainder in 30 days. G. Received $500 cash for services rendered. H. Paid wages $250, check #105. I. Petty cash reimbursement office supplies $25, Maintenance Expense $125, Miscellaneous Expense $35. Cash on hand $18. Check #106. J. Increased Petty Cash by $50, check #107.
On March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501 (Rent Expense). e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012 (Catering Income). g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307 (Catering Income). i. Received and paid the heating bill, 248, Ck. No. 504 (Utilities Expense). j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128 (Gas and Oil Expense). k. Sold catering services for cash for the remainder of the month, 2,649 (Catering Income). l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506 (Salary Expense). Required 1. In the equation, write the owners name above the terms Capital and Drawing. 2. Record the transactions and the balance after each transaction. Identify the account affected when the transaction involves revenues or expenses. 3. Write the account totals from the left side of the equals sign and add them. Write the account totals from the right side of the equals sign and add them. If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.
A business has the following transactions: The business is started by receiving cash from an investor in exchange for common stock $20,000 The business purchases supplies on account $500 The business purchases furniture on account $2,000 The business renders services to various clients on account totaling $9,000 The business pays salaries $2,000 The business pays this months rent $3,000 The business pays for the supplies purchased on account. The business collects from one of its clients for services rendered earlier in the month $1,500. What is total income for the month?