Activity 8-3 The accounting staff of your mother is on leave. For a while, she instructed you to continue the work of her staff by preparing the Trial Balance. The following are shown in the T- accounts of your Mom's business, M's Auditing Services, for the month of August 2020. Cash Salaries Expense Equipment 8/1 100,000 8/5 7,500 8/15 80,000 8/20 25,000 8/25 3,700 l8/30 15,000 8/15 15,000 8/1 30,000 8/10 50,000 Utilitites Expense Office Supplies Furniture & Fixtures 8/1 20,000 8/25 3,700 8/5 7,500 M's, Capital 8/1 150,000 Accounts Payable 8/20 25,000 8/10 50,000 Professional Fees 8/15 80,000

Activity 8-3 The accounting staff of your mother is on leave. For a while, she instructed you to continue the work of her staff by preparing the Trial Balance. The following are shown in the T- accounts of your Mom's business, M's Auditing Services, for the month of August 2020. Cash Salaries Expense Equipment 8/1 100,000 8/5 7,500 8/15 80,000 8/20 25,000 8/25 3,700 l8/30 15,000 8/15 15,000 8/1 30,000 8/10 50,000 Utilitites Expense Office Supplies Furniture & Fixtures 8/1 20,000 8/25 3,700 8/5 7,500 M's, Capital 8/1 150,000 Accounts Payable 8/20 25,000 8/10 50,000 Professional Fees 8/15 80,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter2: The Accounting Information System

Section: Chapter Questions

Problem 67.2C

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Exercise 4-54 Operating Cycle and Current Receivables a. Dither and Sly are attorneys-at-law who specialize in federal income tax law. The): complete their typical case in 6 months or less and collect from the typical client within 1 additional month. b. Johnstons Market specializes in fresh meat and fish. All merchandise must be sold within one week of purchase. Almost all sales are for cash and any receivables are generally paid by the end of the following month. c. Mortondos is a womens clothing store specializing in high-style merchandise. Merchandise spends an average of 7 months on the rack following purchase. Most sales are on credit and the typical customer pays within 1 month of sale. d. Trees Inc. grows Christmas trees and sells them to various Christmas tree lots. Most sales are for cash. It takes 6 years to grow a tree. Required: For each of the businesses described above, indicate the length of the operating cycle.
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.
Multiple step income statement and balance sheet The following selected accounts anti their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019: Cash 92,000 Accounts Receivable 450,000 Merchandise Inventory 370,000 Estimated Returns Inventory 5,000 Office Supplies 10,000 Prepaid Insurance 12,000 Office Equipment 220,000 Accumulated DepreciationOffice Equipment 58,000 Store Equipment 650,000 Accumulated DepreciationStore Equipment 87,500 Accounts Payable 38,500 Customer Refunds Payable 10,000 Salaries Payable 4,000 Note Payable (final payment due 2032) 140,000 Gerri Faber. Capital 431,000 Gerri Faber, Drawing 300,000 Sales 8,925,00 Cost of Merchandise Sold 5,620,00 Sales Salaries Expense 850,000 Advertising Expense 420,000 Depreciation Expense Store Equipment 33,000 Miscellaneous Selling Expense 18,000 Office Salaries Expense 540,000 Rent Expense 48,000 Insurance Expense 24,000 Depredation ExpenseOffice Equipment 10,000 Office Supplies Expense 4,000 Miscellaneous Administrative Exp. 6,000 Interest Expense 12,000 Instructions 1.Prepare a multiple-step income statement. 2.Prepare a statement of owners equity. 3.Prepare a balance sheet, assuming that the current portion of the note payable is 7,000. 4.Briefly explain how multiple-step and single-step income statements differ.
Comprehensive problem 1 Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2016. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 4,500. 5. Received cash from clients on account, 2,450. 9. Paid cash for a newspaper advertisement. 225. 13. Paid Office Station Co. for part of the debt incurred on April 5, 640. 15. Recorded services provided on account for the period May 1-15; 9,180. 16. Paid part-time receptionist for two weeks salary including the amount owed on April 30, 750. 17. Recorded cash from cash clients for fees earned during the period May 1-16, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Recorded services provided on account for the period May 16-20, 4,820. 25. Recorded cash from cash clients for fees earned for the period May 17-23, 7,900. 27. Received cash from clients on account, 9,520. 28. Paid part-time receptionist for two weeks salary, 750. 30. Paid telephone bill for May, 260. 31. Paid electricity bill for May, 810. 31. Recorded cash from cash clients for fees earned for the period May 26-31, 3,300. 31. Recorded services provided on account for the remainder of May, 2,650. 31. Paid dividends, 10,500. Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2016, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2016, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two- column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during May is 275. b. Supplies on hand on May 31 are 715. c. Depreciation of office equipment for May is 330. d. Accrued receptionist salary on May 31 is 325. e. Rent expired during May is 1,600. f. Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. (Income Summary is account 34 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.
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.
Customer Deposits Wolfe $ Wolfe collected $9,000 from a customer on April 1 and agreed to provide legal services during the next three months. Wolfe $ Wolfe expects to provide an equal amount of services each month. Required Prepare the journal entry for the receipt of the customer deposit on April 1. Prepare the adjusting entry on April 30. What will be the effect on net income for April if the entry in (2) is not recorded?
Continuing Problem 4.Total of Debit column: 40,750 The transactions completed by PS Music during June 20Y5 were described .it the end of Chapter 1. The following transactions were completed during July, the second month of businesss operations: July 1. Peyton Smith made an additional investment k PS Music in exchange for common stock by depositing 5,000 in PS Mu wet checking account. 1.Instead of continuing to share office space with a local real estate agency. Peyton decided to rent office space near a local musk store, Paid rent for July, 1,750. 1.Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft and fire. The policy covers a one year period. 2.Received 1,000 on account 3. On behalf of PS Musk, Peyton signed a contract with a local radio station. KXMD, to provide guest spots for the next three months. The contract requires PS Musk to provide a guest disc jockey for 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 will be billed to KXMD at 40 per hour. In accordance with the contract Peyton received 7,200 from KXMD as an advance payment for the first two months. 3.Paid 2SO on account 4.Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5.Purchased office equipment on account from Office Mart. 7,500. 8.Paid for a newspaper advertisement 200. 11.Received 1.000 for serving as a disc jockey for a party. 13.Paid 700 to a local audio electronics store for rental of digital recording equipment 14.Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Pane 2 of the two-column journal: 16.Received 2,000 for serving as a disc jockey for a wedding reception. 18.Purchased supplies on account 850 21.Paid 620 to Upload Musk for use of its current musk demos in making various musk sets. 22.Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23.Served as disc jockey for a party for 2,500 Received 750, with the remainder due August 4.20YS. 27.Paid electric Ml 915. 28.Paid wages of 1,200 to receptionist and part-time assistant. 29.Paid miscellaneous expenses, 540. 30.Served as a disc jockey for a charity ball for 1,500, Received S00 with the remainder due on August 9. 20Y5. 31.Received 3,000 for serving as a disc jockey for a party. 31.Paid 1.400 royalties (musk expense) to National Musk Clearing for use of various artists music during July. 31. Paid dividends, 1,250. PS Musics chart of accounts and the balance of accounts as of July 1, 20Y5 (all normal balances), are as follows: 11 Cash 3,920 12 Accounts Receivable 1,000 14 Supplies 170 15 Prepaid Insurance 17 Office Equipment 21 Accounts Payable 250 23 Unearned Revenue 31 Common Stock 4.000 33 Dividends 500 41 Fees Earned 6,200 50 Wages Expense 400 51 Office Rent Expense 800 52 Equipment Rent Expense 67S 53 Utilities Expense 300 54 Music Expense 1.590 55 Advertising Expense 500 56 Supplies Expense 180 59 Miscellaneous Expense 415 Instructions 1. Enter the July 1, 20Y5, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column, and place a check mark () in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance as of July 31, 20Y5.
(Appendix 3.1) Cash-Basis Accounting Puntarelli Contracting keep its accounting records on a cash basis during the year. At year end, it adjusts its books to the accrual basis for preparing its financial statements. At the end of 2018, Puntarelli reported the following balance sheet items. It is now the end of 2019. The companys checkbook shows a balance of 4,700, which includes cash receipts from customers of 51,300 and cash payments of 49,300. An examination of the cash payments shows that: (1) 30,600 was paid to suppliers, (2) 12,700 was paid for other operating costs (including 7,200 paid on January 1 for 2 years annual rent), and (3) 6,000 was withdrawn by T. Puntarelli. On December 51, 2019, (1) customers owed Puntarelli Contracting 55,900, (2) Puntarelli owed suppliers and employees 7,000 and 900, respectively, and (3) the ending inventory was 6,300. Puntarelli is depreciating the equipment using straight line depreciation over a 10-year life (no residual value). Required: 1. Using accrual based accounting, prepare a 2019 income statement (show supporting calculations). 2. Using accrual-based accounting, prepare a December 31, 2019, balance sheet (show supporting calculations).
Multiple-step income statement and balance sheet The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2018: Cash 92,000 Retained Earnings 381,000 Accounts Receivable 450,000 Dividends 300,000 Inventory 370,000 Sales 8,925,000 Estimated Returns Inventory 5,000 Cost of Goods Sold 5,620,000 Office Supplies 10,000 Sales Salaries Expense 850,000 Prepaid Insurance 12,000 Advertising Expense 420,000 Office Equipment 220,000 Depreciation Expense Accumulated Depreciation Store Equipment 33,000 Office Equipment 58,000 Miscellaneous Selling Expense 18,000 Store Equipment 650,000 Office Salaries Expense 540,000 Accumulated Depreciation Rent Expense 48,000 Store Equipment 87,500 Insurance Expense 24,000 Accounts Payable 38,500 Depreciation Expense Customers Refunds Payable 10,000 Office Equipment 10,000 Salaries Payable 4,000 Office Supplies Expense 4,000 Note Payable Miscellaneous Administrative (final payment due 2034) 140,000 Exp. 6,000 Common Stock 50,000 Interest Expense 12,000 Instructions 1. Prepare a multiple-step income statement. 2. Prepare a retained earnings statement. 3. Prepare a balance sheet, assuming that the current portion of the note payable is 7,000. 4. Briefly explain how multiple-step and single-step income statements differ.