Case #1: Ricky Rock Wrestling for Fun Richard Brandt graduated from York University with his BAS although he spent more time in the gym than in the classrooms and libraries. His parents and grandparents were very proud and happy of this achievement. As a graduation gift, Richard's Grandparents gave him $50,000 to start his own business. So, on September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. As a student, he learned and practiced Greco-Roman wrestling and built an impressive body. Now graduated from university he has decided to continue with his passion of wrestling but added a spin to make money. In one tournament in 2013 Richard meet Linda who was competing for a US university team and she mentioned that she was working on girls birthday parties focused on wrestling. In June 2015 Richard contacted Linda and told her about his idea and Linda shared with him all documentation she has prepared in these years including: brochure to be distributed to potential customers, personal cards, party themes, parties activities, schedules and agendas, etc. During August Richard has completed his business plan and was ready to launch 'Ricky Rock Wresting for Fun' in the GTA. The following is a list of transactions that occurred during the first month of operations: September 1 Opened a business bank account with the $50,000 received as a gift from the Grandparents $50,000 September 1 Signed 12 month commercial insurance contract for any liability that might emerge from the activity, $600 per month for 1 year. September 2 Purchase in cash costumes of famous wrestlers to wear at parties. The costumes can last 2 years $600. September 3 Paid in cash the set up of the web site. It expects to last the whole life of this business $2,000. September 4 Collected the brochures and presentation cards to be used in promoting the business. One third is paid in cash while the rest will be paid on October 5th $300. September 5 First event organized and delivered. Birthday party for a 5 years old boy. Received the payment in cash $1,000. September 6 Second event organized and delivered as part of a series of activities organized by a charity to raise funds. One third is paid in cash while the rest will be paid by the Charity Organization on October 5th $3,000. September 8th Labour day, no events, no work so Richard goes to the gym and does a double routine (the rest of the days he just does a simple routine of 2.5 hours). September 12 Third event organized and delivered. Birthday party for a 7 years old boy. Parents promise to pay in a few days $1,000. September 15 Pays first 2 months of insurance $1,200. September 19 & 20 Fourth event organized and delivered. Provided one of the activities of a corporate team building extravaganza weekend. The contract signed says the payment will be effective in 30 days with a cheque $2,000. September 23 Paid the gym membership for September, October, November and December $2,000.
Case #1: Ricky Rock Wrestling for Fun Richard Brandt graduated from York University with his BAS although he spent more time in the gym than in the classrooms and libraries. His parents and grandparents were very proud and happy of this achievement. As a graduation gift, Richard's Grandparents gave him $50,000 to start his own business. So, on September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. As a student, he learned and practiced Greco-Roman wrestling and built an impressive body. Now graduated from university he has decided to continue with his passion of wrestling but added a spin to make money. In one tournament in 2013 Richard meet Linda who was competing for a US university team and she mentioned that she was working on girls birthday parties focused on wrestling. In June 2015 Richard contacted Linda and told her about his idea and Linda shared with him all documentation she has prepared in these years including: brochure to be distributed to potential customers, personal cards, party themes, parties activities, schedules and agendas, etc. During August Richard has completed his business plan and was ready to launch 'Ricky Rock Wresting for Fun' in the GTA. The following is a list of transactions that occurred during the first month of operations: September 1 Opened a business bank account with the $50,000 received as a gift from the Grandparents $50,000 September 1 Signed 12 month commercial insurance contract for any liability that might emerge from the activity, $600 per month for 1 year. September 2 Purchase in cash costumes of famous wrestlers to wear at parties. The costumes can last 2 years $600. September 3 Paid in cash the set up of the web site. It expects to last the whole life of this business $2,000. September 4 Collected the brochures and presentation cards to be used in promoting the business. One third is paid in cash while the rest will be paid on October 5th $300. September 5 First event organized and delivered. Birthday party for a 5 years old boy. Received the payment in cash $1,000. September 6 Second event organized and delivered as part of a series of activities organized by a charity to raise funds. One third is paid in cash while the rest will be paid by the Charity Organization on October 5th $3,000. September 8th Labour day, no events, no work so Richard goes to the gym and does a double routine (the rest of the days he just does a simple routine of 2.5 hours). September 12 Third event organized and delivered. Birthday party for a 7 years old boy. Parents promise to pay in a few days $1,000. September 15 Pays first 2 months of insurance $1,200. September 19 & 20 Fourth event organized and delivered. Provided one of the activities of a corporate team building extravaganza weekend. The contract signed says the payment will be effective in 30 days with a cheque $2,000. September 23 Paid the gym membership for September, October, November and December $2,000.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 3EA: Bridget Youhzi works for a large firm. Her alma mater has asked her to make a presentation to the...
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Concept explainers
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Question
at the end of the accounting period(sept 30th, T account after AJE), what is the balance of advances from customers? use accural accounting
multiple choice: a) $0, b) $1000, c) $3000, d) $2000, e) none of the other alternatives are correct
Transcribed Image Text:Case #1: Ricky Rock Wrestling for Fun
Richard Brandt graduated from York University with his BAS although he spent more time in the gym than in the classrooms and libraries. His parents and grandparents were very proud and happy of this
achievement. As a graduation gift, Richard's Grandparents gave him $50,000 to start his own business.
So, on September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and
practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks.
As a student, he learned and practiced Greco-Roman wrestling and built an impressive body. Now graduated from university he has decided to continue with his passion of wrestling but added a spin to
make money. In one tournament in 2013 Richard meet Linda who was competing for a US university team and she mentioned that she was working on girls birthday parties focused on wrestling. In June
2015 Richard contacted Linda and told her about his idea and Linda shared with him all documentation she has prepared in these years including: brochure to be distributed to potential customers,
personal cards, party themes, parties activities, schedules and agendas, etc. During August Richard has completed his business plan and was ready to launch 'Ricky Rock Wresting for Fun' in the GTA.
The following is a list of transactions that occurred during the first month of operations:
September 1 Opened a business bank account with the $50,000 received as a gift from the Grandparents $50,000
September 1 Signed 12 month commercial insurance contract for any liability that might emerge from the activity, $600 per month for 1 year.
September 2 Purchase in cash costumes of famous wrestlers to wear at parties. The costumes can last 2 years $600.
September 3 Paid in cash the set up of the web site. It expects to last the whole life of this business $2,000.
September 4 Collected the brochures and presentation cards to be used in promoting the business. One third is paid in cash while the rest will be paid on October 5th $300.
September 5 First event organized and delivered. Birthday party for a 5 years old boy. Received the payment in cash $1,000.
September 6 Second event organized and delivered as part of a series of activities organized by a charity to raise funds. One third is paid in cash while the rest will be paid by the Charity Organization on
October 5th $3,000.
September 8th Labour day, no events, no work so Richard goes to the gym and does a double routine (the rest of the days he just does a simple routine of 2.5 hours).
September 12 Third event organized and delivered. Birthday party for a 7 years old boy. Parents promise to pay in a few days $1,000.
September 15 Pays first 2 months of insurance $1,200.
September 19 & 20 Fourth event organized and delivered. Provided one of the activities of a corporate team building extravaganza weekend. The contract signed says the payment will be effective in 30
days with a cheque $2,000.
September 23 Paid the gym membership for September, October, November and December $2,000.
Transcribed Image Text:September 24 Telephone bill for $150 was received for the month of September, payment due October 5th $150.
September 26 Fifth event organized and delivered. Birthday party for a 4 years old boy. Received payment in cash $1,000.
September 26 One of the parents at the birthday party for a 4 years old boy hires him for his son's birthday party on October 10th. Received payment in cash $1,000.
September 29 Received the payment for the birthday party for the 7 years old boy of September 12th $1,000.
September 30 Richard pays to his parents a rent for using the car for business purposes and to go and come back from the gym, $200.
September 30 Richard promised to pay on October 6th to his parents the extra charge that comes in the insurance premium of their cars for having him as an additional driver (male under 25) $800.
Additional information: September 30 Inventory of brochures and cards showed that two thirds of them are still available (not used) $200.
Prepare "T" Accounts in ACCRUAL and CASH basis for this case using the following chart of accounts, when relevant, prepare the Income statement, Statement of Retained Earnings and Balance Sheet
and then answer the questions.
ACCRUAL accounting:
Revenues
Telephone Expense
Car Rent Expenses
Car Rent Insurance Expense
Costumes Expense
Brochures Expense
Gym Membership Expense
Insurance Expense
Advances From Customers
Owner's Equity
CASH accounting:
Revenue
Car rent expenses
Car Rent Insurance Expense
Costumes Expense
Telephone Expense
Owner's equity
Advances From Customers
Cash
Brochures
Accounts Receivables
Prepaid Insurance
Prepaid Gym Membership
Costumes
Accumulated Depreciation Costumes
Web Site (intangible asset)
Accounts Payable
Costumes Depreciation Expense
Telephone Payable
Expense on Web site
Insurance Expense
Gym Membership Expense
Brochures Expense
Cash
Costumes Depreciation Expense
Accounts Payable
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