Skip to main content

Bartleby Sitemap - Textbook Solutions

All Textbook Solutions for Accounting (Text Only)

Name some users of accounting information.2DQ 3DQ Josh Reilly is the owner of Dispatch Delivery Service. Recently, Josh paid interest of 4,500 on a personal loan of 75,000 that he used to begin the business. Should Dispatch Delivery Service record the interest payment? Explain.On July 12, Reliable Repair Service extended an offer of 150,000 for land that had been priced for sale at 185,000. On September 3, Reliable Repair Service accepted the seller's counteroffer of 167,500. Describe how Reliable Repair Service should record the land.6DQ Describe the difference between an account receivable and an account payable.A business had revenues of 679,000 and operating expenses of 588,000. Did the business (a) incur a net loss or (b) realize net income?A business had revenues of 640,000 and operating expenses of 715,000. Did the business (a) incur a net loss or (b) realize net income?The financial statements are interrelated. (a) What item of financial or operating data appears on both the income statement and the statement of owner's equity? (b) What item appears on both the balance sheet and the statement of owner's equity? (c) What item appears on both the balance sheet and the statement of cash flows?1.1APE 1.1BPE Accounting equation Brock Hahn is the owner and operator of Dream-It LLC, a motivational consulting business. At the end of its accounting period, December 31, 2015, Dream-It has assets of 780,000 and liabilities of 150,000. Using the accounting equation, determine the following amounts: a. Owners equity as of December 31, 2015. b. Owners equity as of December 31, 2016, assuming that assets increased by 90,000 and liabilities increased by 25,000 during 2016.Accounting equation Fritz Evans is the owner and operator of Be-The-One, a motivational consulting business. At the end of its accounting period, December 31, 2015, Be-The-One has assets of 395,000 and liabilities of 97,000. Using the accounting equation, determine the following amounts: a. Owners equity as of December 31, 2015. b. Owners equity as of December 31, 2016, assuming that assets decreased by 65,000 and liabilities increased by 36,000 during 2016.Transactions Arrowhead Delivery Service is owned and operated by Gates Deeter. The following selected transactions were completed by Arrowhead Delivery Service during August: 1. Received cash from owner as additional investment, 25,000. 2. Paid creditors on account, 3,750. 3. Billed customers for delivery services on account, 22,400. 4. Received cash from customers on account, 11,300. 5. Paid cash to owner for personal use, 6,000. Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owners Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by 25,000; Owners Equity (Gates Deeter, Capital) increases by 25,000.Transactions Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery Service during May: 1.Received cash from owner as additional investment, 18,000. 2.Paid advertising expense, 4,850. 3.Purchased supplies on account, 2,100. 4.Billed customers for delivery services on account, 14,700. 5.Received cash from customers on account, 8,200. Indicate the effect of each transaction on the accounting equation elements (Assets, Liabilities, Owner's Equity, Drawing, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows: (1) Asset (Cash) increases by 18,000; Owner's Equity (Katie Wyer, Capital) increases by 18,000.Income statement The revenues and expenses of Ousel Travel Service for the year ended November 30, 2016, follow: Fees earned 1,475,000 Office expense 320,000 Miscellaneous expense 28,000 Wages expense 885,000 Prepare an income statement for the year ended November 30, 2016.1.4BPE Statement of owners equity Using the income statement for Ousel Travel Service shown in Practice Exercise 1-4A, prepare a statement of owners equity for the year ended November 30, 2016. Shane Ousel, the owner, invested an additional 50,000 in the business during the year and withdrew cash of 30,000 for personal use. Shane Ousel, capital as of December 1, 2015, was 666,000.1.5BPE Balance sheet Using the following data for Ousel Travel Service as well as the statement of owners equity shown in Practice Exercise 1-5A, prepare a balance sheet as of November 30, 2016: Accounts payable 62,500 Account s receivable 186,000 Cash 308,000 Land 480,000 Supplies 16,500 1.6BPE 1.7APE 1.7BPE Ratio of liabilities to owners equity The following data were taken from Mesa Companys balance sheet: a. Compute the ratio of liabilities to owners equity. b. Has the creditors risk increased or decreased from December 31, 2015, to December 31, 2016?1.8BPE Types of businesses The following is a list of well-known companies: 1. Alcoa Inc. 2. Boeing 3. Caterpillar 4. Citigroup Inc. 5. CVS 6. Delta Air lines 7. eBay Inc. 8. Fed Ex 9. Ford Motor Company 10. Gap Inc. 11. HR Block 12. Hilton Hospitality, Inc. 13. Procter Gamble 14. Sun Trust 15. Wal-Mart Stores, Inc. a. Indicate whether each of these companies is primarily a service, merchandise, or manufacturing business. If you are unfamiliar with the company, use the Internet to locate the company's home page or use the finance website of Yahoo (finance.yahoo.com). b. For which of the preceding companies is the accounting equation relevant?1.2EX 1.3EX 1.4EX 1.5EX 1.6EX Accounting equation Annie Rasmussen is the owner and operator of Go44, a motivational consulting business. At the end of its accounting period, December 31, 2015, Go44 has assets of 720,000 and liabilities of 180,000. Using the accounting equation and considering each case independently, determine the following amounts: a. Annie Rasmussen, capital, as of December 31, 2015. b. Annie Rasmussen, capital, as of December 31, 2016, assuming that assets increased by 96,500 and liabilities increased by 30,000 during 2016. c. Annie Rasmussen, capital, as of December 31, 2016, assuming that assets decreased by 168,000 and liabilities increased by 15,000 during 2016. d. Annie Rasmussen, capital, as of December 31, 2016, assuming that assets increased by 175,000 and liabilities decreased by 18,000 during 2016. e. Net income (or net loss) during 2016, assuming that as of December 31, 2016, assets were 880,000, liabilities were 220,000, and there were no additional investments or withdrawals.Asset, liability, and owners equity items Indicate whether each of the following is identified with (1) an asset, (2) a liability, or (3) owners equity: a. accounts payable b. cash c. fees earned d. land e. supplies f. wages expense Effect of transactions on accounting equation Describe how the following business transactions affect the three elements of the accounting equation: a.Invested cash in business. b.Paid for utilities used in the business. c.Purchased supplies for cash. d.Purchased supplies on account. e.Received cash for services performed.Effect of transactions on accounting equation a.A vacant lot acquired for 115,000 is sold for 298,000 in cash. What is the effect of the sale on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity? b.Assume that the seller owes 80,000 on a loan for the land. After receiving the 298,000 cash in (a), the seller pays the 80,000 owed. What is the effect of the payment on the total amount of the seller's (1) assets, (2) liabilities, and (3) owner's equity? c.Is it true that a transaction always affects at least two elements (Assets, Liabilities, or Owner's Equity) of the accounting equation? Explain.Effect of transactions on owner's equity Indicate whether each of the following types of transactions will either (a) increase owner's equity or (b) decrease owner's equity: 1.expenses 2.owner's investments 3.owner's withdrawals 4.revenues Transactions The following selected transactions were completed by Cota Delivery Service during July: 1. Received cash from owner as additional investment, 35,000. 2. Purchased supplies for cash, 1,100. 3. Paid rent for October, 4,500. 4. Paid advertising expense, 900. 5. Received cash for providing delivery services, 33,000. 6. Billed customers for delivery services on account, 58,000. 7. Paid creditors on account, 2,900. 8. Received cash from customers on account, 27,500. 9. Determined that the cost of supplies on hand was 300 and 8,600 of supplies had been used during the month. 10. Paid cash to owner for personal use, 2,500. Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (10), in a column, and inserting at the right of each number the appropriate letter from the following list: a. Increase in an asset, decrease in another asset. b. Increase in an asset, increase in a liability. c. Increase in an asset, increase in owners equity. d. Decrease in an asset, decrease in a liability. e. Decrease in an asset, decrease in owners equity.Nature of transactions Teri West operates her own catering service. Summary financial data for July are presented in equation form as follows. Each line designated by a number indicates the effect of a transaction on the equation. Each increase and decrease in owner's equity, except transaction (5), affects net income. a.Describe each transaction. b.What is the amount of the net increase in cash during the month? c.What is the amount of the net increase in owner's equity during the month? d.What is the amount of the net income for the month? e.How much of the net income for the month was retained in the business?Net income and owner's withdrawals The income statement of a proprietorship for the month of February indicates a net income of 17,500. During the same period, the owner withdrew 25,500 in cash from the business for personal use. Would it be correct to say that the business had incurred a net loss of 8,000 during the month? Discuss.Net income and owner's equity for four businesses Four different proprietorships, Jupiter, Mars, Saturn, and Venus, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of owner's equity, are summarized as follows: Total Assets Total Liabilities Beginning of the year 550,000 215,000 End of the year 844,000 320,000 On the basis of the preceding data and the following additional information for the year, determine the net income (or loss) of each company for the year. (Hint: First, determine the amount of increase or decrease in owner's equity during the year.) Jupiter: The owner had made no additional investments in the business and had made no withdrawals from the business. Mars: The owner had made no additional investments in the business but had withdrawn 36,000. Saturn: The owner had made an additional investment of 60,000 but had made no withdrawals. Venus: The owner had made an additional investment of 60,000 and had withdrawn 36,000.Balance sheet items From the following list of selected items taken from the records of Bobcat Appliance Service as of a specific date, identify those that would appear on the balance sheet: 1. Accounts Receivable 2. Cash 3. Fees Earned 4. Land 5. Mary Bayern, Capital 6. Supplies 7. Supplies Expense 8. Utilities Expense 9. Wages Expense 10. Wages Payable Income statement items Based on the data presented in Exercise 1-16, identify those items that would appear on the income statement.1.18EX Income statement Dairy Services was organized on August 1, 2016. A summary of the revenue and expense transactions for August follows: Fees earned 783,000 Wages expense 550,000 Rent expense 35,000 Supplies expense 8,500 Miscellaneous expense 11,400 Prepare an income statement for the month ended August 31.Missing amounts from balance sheet and income statement data One item is omitted in each of the following summaries of balance sheet and income statement data for the following four different proprietorships: Determine the missing amounts, identifying them by letter. (Hint: First, determine the amount of increase or decrease in owner's equity during the year.)1.21EX Financial statements Each of the following items is shown in the financial statements of Exxon Mobil Corporation: 1. Accounts payable 2. Cash equivalents 3. Crude oil inventory 4. Equipment 5. Exploration expenses 6. Income taxes payable 7. Investments 8. Long-term debt 9. Marketable securities 10. Notes and loans payable 11. Notes receivable 12. Operating expenses 13. Prepaid taxes 14. Sales 15. Selling expenses a. Identify the financial statement (balance sheet or income statement) in which each item would appear. b. Can an item appear on more than one financial statement? c. Is the accounting equation relevant for Exxon Mobil Corporation?Statement of cash flows Indicate whether each of the following activities would be reported on the statement of cash flows as (a) an operating activity, (b) an investing activity, or (c) a financing activity: 1.Cash received from fees earned. 2.Cash paid for expenses. 3.Cash paid for land. 4.Cash paid to owner for personal use.1.24EX Financial statements We-Sell Realty, organized August 1, 2016, is owned and operated by Omar Farah. How many errors can you find in the following statements for We-Sell Realty, prepared after its first month of operations?Ratio of liabilities to stockholders equity The Home Depot, Inc., is the worlds largest home improvement retailer and one of the largest retailers in the United States based on net sales volume. The Home Depot operates over 2,200 Home Depot stores that sell a wide assortment of building materials and home improvement and lawn and garden products. The Home Depot recently reported the following balance sheet data (in millions): a. Determine the total liabilities at the end of Years 2 and 1. b. Determine the ratio of liabilities to stockholders equity for Year 2 and Year 1. Round to two decimal places. c. What conclusions regarding the margin of protection to the creditors can you draw from (b)?Ratio of liabilities to stockholders equity Lowes Companies Inc., a major competitor of The Home Depot in the home improvement business, operates over 1,700 stores. Lowes recently reported the following balance sheet data (in millions): a. Determine the total stockholders equity at the end of Years 2 and 1. b. Determine the ratio of liabilities to stockholders equity for Year 2 and Year 1. Round to two decimal places. c. What conclusions regarding the risk to the creditors can you draw from (b)? d. Using the balance sheet data for The Home Depot in Exercise 1-26, how does the ratio of liabilities to stockholders equity of Lowes compare to that of The Home Depot?Transactions On April 1 of the current year, Andrea Byrd established a business to manage rental property. She completed the following transactions during April: a. Opened a business bank account with a deposit of 45,000 from personal funds. b. Purchased office supplies on account, 2,000. c. Received cash from fees earned for managing rental property, 8,500. d. Paid rent on office and equipment for the month, 5,000. e. Paid creditors on account, 1,375. f. Billed customers for fees earned for managing rental property, 11,250. g. Paid automobile expenses (including rental charges) for month, 840, and miscellaneous expenses, 900. h. Paid office salaries, 3,600. i. Determined that the cost of supplies on hand was 550; therefore, the cost of supplies used was 1,450. j. Withdrew cash for personal use, 2,000. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2. Briefly explain why the owners investment and revenues increased owners equity, while withdrawals and expenses decreased owners equity. 3. Determine the net income for April. 4. How much did Aprils transactions increase or decrease Andrea Byrds capital?1.2APR Financial statements Seth Feye established Reliance Financial Services on July 1, 2016. Reliance Financial Services offers financial planning advice to its clients. The effect of each transaction and the balances after each transaction for July follow: Instructions 1. Prepare an income statement for the month ended July 31, 2016. 2. Prepare a statement of owners equity for the month ended July 31, 2016. 3. Prepare a balance sheet as of July 31, 2016. 4. (Optional) Prepare a statement of cash flows for the month ending July 31, 2016.Transactions; financial statements On July 1, 2016, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July: a. Opened a business bank account with a deposit of 25,000 from personal funds. b. Purchased office supplies on account, 1,850. c. Paid creditor on account, 1,200. d. Earned sales commissions, receiving cash, 41,500. e. Paid rent on office and equipment for the month, 3,600. f. Withdrew cash for personal use, 4,000. g. Paid automobile expenses (including rental charge) for month, 3,050, and miscellaneous expenses, 1,600. h. Paid office salaries, 5,000. i. Determined that the cost of supplies on hand was 950; therefore, the cost of supplies used was 900. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2. Prepare an income statement for July, a statement of owners equity for July, and a balance sheet as of July 31.Transactions; financial statements DLite Dry Cleaners is owned and operated by Joel Palk. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets and the liabilities of the business on July 1, 2016, are as follows: Cash, 45,000; Accounts Receivable, 93,000; Supplies, 7,000; Land, 75,000; Accounts Payable, 40,000. Business transactions during July are summarized as follows: a. Joel Palk invested additional cash in the business with a deposit of 35,000 in the business bank account. b. Paid 50,000 for the purchase of land adjacent to land currently owned by DLite Dry Cleaners as a future building site. c. Received cash from cash customers for dry cleaning revenue, 32,125. d. Paid rent for the month, 6,000. e. Purchased supplies on account, 2,500. f. Paid creditors on account, 22,800. g. Charged customers for dry cleaning revenue on account, 84,750. h. Received monthly invoice for dry cleaning expense for July (to be paid on August 10), 29,500. i. Paid the following: wages expense, 7,500; truck expense, 2,500; utilities expense, 1,300; miscellaneous expense, 2,700. j. Received cash from customers on account, 88,000. k. Determined that the cost of supplies on hand was 5,900; therefore, the cost of supplies used during the month was 3,600. l. Withdrew 12,000 cash for personal use. Instructions 1. Determine the amount of Joel Palks capital as of July 1 of the current year. 2. State the assets, liabilities, and owners equity as of July 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction. 3. Prepare an income statement for July, a statement of owners equity for July, and a balance sheet as of July 31. 4. (Optional) Prepare a statement of cash flows for July.1.6APR Transactions Amy Austin established an insurance agency on March 1 of the current year and completed the following transactions during March: a. Opened a business bank account with a deposit of 50,000 from personal funds. b. Purchased supplies on account, 4,000. c. Paid creditors on account, 2,300. d. Received cash from fees earned on insurance commissions, 13,800. e. Paid rent on office and equipment for the month, 5,000. f. Paid automobile expenses for the month, 1,150, and miscellaneous expenses, 300. g. Paid office salaries, 2,500. h. Determined that the cost of supplies on hand was 2,700; therefore, the cost of supplies used was 1,300. i. Billed insurance companies for sales commissions earned, 12,500. j. Withdrew cash for personal use, 3,900. Instructions 1.Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2.Briefly explain why the owner's investment and revenues increased owner's equity, while withdrawals and expenses decreased owner's equity. 3.Determine the net income for March. 4.How much did March's transactions increase or decrease Amy Austin's capital?Financial statements The amounts of the assets and liabilities of Wilderness Travel Service at April 30, 2016, the end of the year, and its revenue and expenses for the year follow. The capital of Harper Borg, owner, was 180,000 at May 1, 2015, the beginning of the year, and the owner withdrew 40,000 during the year. Accounts payable 25,000 Accounts receivable 210,000 Cash 146,000 Fees earned 875,000 Miscellaneous expense 15,000 Rent expense 75,000 Supplies 9,000 Supplies expense 12,000 Taxes expense 10,000 Utilities expense 38,000 Wages expense 525,000 Instructions 1. Prepare an income statement for the year ended April 30, 2016. 2. Prepare a statement of owners equity for the year ended April 30, 2016. 3. Prepare a balance sheet as of April 30, 2016. 4. What item appears on both the income statement and statement of owners equity?Financial statements Jose Loder established Bronco Consulting on August 1, 2016. The effect of each transaction and the balances after each transaction for August follow: Instructions 1. Prepare an income statement for the month ended August 31, 2016. 2. Prepare a statement of owners equity for the month ended August 31, 2016. 3. Prepare a balance sheet as of August 31, 2016. 4. (Optional) Prepare a statement of cash flows for the month ending August 31, 2016.Transactions; financial statements On April 1, 2016, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April: a. Opened a business bank account with a deposit of 24, 000 from personal funds. b. Paid rent on office and equipment for the month, 3,600. c. Paid automobile expenses (including rental charge) for month, 1,350, and miscellaneous expenses, 600. d. Purchased office supplies on account, 1,200. e. Earned sales commissions, receiving cash, 19,800. f. Paid creditor on account, 750. g. Paid office salaries, 2,500. h. Withdrew cash for personal use, 3,500. i. Determined that the cost of supplies on hand was 300; therefore, the cost of supplies used was 900. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2. Prepare an income statement for April, a statement of owners equity for April, and a balance sheet as of April 30.Transactions; financial statements Bevs Dry Cleaners is owned and operated by Beverly Zahn. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets and the liabilities of the business on November 1, 2016, are as follows: Cash, 39,000; Accounts Receivable, 80,000; Supplies, 11,000; Land, 50,000; Accounts Payable, 31,500. Business transactions during November are summarized as follows: a. Beverly Zahn invested additional cash in the business with a deposit of 21,000 in the business bank account. b. Purchased land adjacent to land currently owned by Bevs Dry Cleaners to use in the future as a parking lot, paying cash of 35,000. c. Paid rent for the month, 4,000. d. Charged customers for dry cleaning revenue on account, 72,000. e. Paid creditors on account, 20,000. f. Purchased supplies on account, 8,000. g. Received cash from cash customers for dry cleaning revenue, 38,000. h. Received cash from customers on account, 77,000. i. Received monthly invoice for dry cleaning expense for November (to be paid on December 10), 29,450. j. Paid the following: wages expense, 24,000; truck expense, 2,100; utilities expense, 1,800; miscellaneous expense, 1,300. k. Determined that the cost of supplies on hand was 11,800; therefore, the cost of supplies used during the month was 7,200. l. Withdrew 5,000 for personal use. Instructions 1. Determine the amount of Beverly Zahns capital as of November 1. 2. State the assets, liabilities, and owners equity as of November 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction. 3. Prepare an income statement for November, a statement of owners equity for November, and a balance sheet as of November 30. 4. (Optional) Prepare a statement of cash flows for November.1.6BPR Peyton Smith enjoys listening to all types of music and owns countless CDs. Over the years, Peyton has gained a local reputation for knowledge of music from classical to rap and the ability to put together sets of recordings that appeal to all ages. During the last several months, Peyton served as a guest disc jockey on a local radio station. In addition, Peyton has entertained at several friends parties as the host deejay. On June 1, 2016, Peyton established a proprietorship known as PS Music. Using an extensive collection of music MP3 files, Peyton will serve as a disc jockey on a fee basis for weddings, college parties, and other events. During June, Peyton entered into the following transactions: June 1. De posited 4,000 in a checking account in the name of PS Music. 2. Received 3,500 from a local radio station for serving as the guest disc jockey for June. 2. Agreed to share office space with a local real estate agency, Pinnacle Realty. PS Music will pay one-fourth of the rent. In addition, PS Music agreed to pay a portion of the wages of the receptionist and to pay one-fourth of the utilities. Paid 800 for the rent of the office. 4. Purchased supplies from City Office Supply Co for 350. Agreed to pay 100 within 10 days and the remainder by July 5, 2016. 6. Paid 500 to a local radio station to advertise the services of PS Music twice daily for two weeks. 8. Paid 675 to a local electronics store for renting digital recording equipment. 12. Paid 350 (music expense) to Cool Music for the use of its current music demos to make various music sets. 13. Paid City Office Supply Co. 100 on account. 16. Received 300 from a dentist for providing two music sets for the dentist to play for her patients. 22. Served as disc jockey for a wedding party. The father of the bride agreed to pay 1,000 in July. 25. Received 500 for serving as the disc jockey for a cancer charity ball hosted by the local hospital. 29. Paid 240 (music expense) to Galaxy Music for the use of its library of music demos. 30. Received 900 for serving as PS disc jockey for a local clubs monthly dance. 30. Paid Pinnacle Realty 400 for PS Musics s hare of the receptionists wages for June. 30. Paid Pinnacle Realty 300 for PS Musics s hare of the utilities for June. 30. Determined that the cost of supplies on hand is 170. Therefore, the cost of supplies used during the month was 180. 30. Paid for miscellaneous expenses, 415. 30. Paid 1,000 royalties (music expense) to National Music Clearing for use of various artists music during the month. 30. Withdrew 500 of cash from PS Music for personal use. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: 2. Prepare an income statement for PS Music for the month ended June 30, 2016. 3. Prepare a statement of owners equity for PS Music for the month ended June 30, 2016. 4. Prepare a balance sheet for PS Music as of June 30, 2016.1.1CP 1.2CP 1.3CP What is the difference between an account and a ledger?2.2DQ 2.3DQ eCatalog Services Company performed services in October for a specific customer for a fee of 7,890. Payment was received the following November. (a).Was the revenue earned in October or November? (b).What accounts should be debited and credited in (1) October and (2) November?If the two totals of a trial balance are equal, does it mean that there are no errors in the accounting records? Explain.Assume that a trial balance is prepared with an account balance of 8,900 listed as 9,800 and an account balance of 1,000 listed as 100. Identify the transposition and the slide.Assume that when a purchase of supplies of 2,650 for cash was recorded, both the debit and the credit were journalized and posted as 2,560. (a) Would this error cause the trial balance to be out of balance? (b) Would the trial balance be out of balance if the 2,650 entry had been journalized correctly but the credit to Cash had been posted as 2,560?Assume that Muscular Consulting erroneously recorded the payment of 7,500 of owner withdrawals as a debit to Salary Expense. (a) How would this error affect the equality of the trial balance? (b) How would this error affect the income statement, statement of owners equity, and balance sheet?Assume that Sunshine Realty Co. borrowed 300,000 from Columbia First Rank and Trust. In recording the transaction, Sunshine erroneously recorded the receipt as a debit to Cash, 300,000, and a credit to Fees Earned, 300,000. (a) How would this error affect the equality of the trial balance? (b) How would this error affect the income statement, statement of owners equity, and balance sheet?Checking accounts are a common form of deposits for banks. Assume that Surety Storage has a checking account at Ada Savings Bank. What type of account (asset, liability, owners equity, revenue, expense, drawing) does the account balance of 11,375 represent from the viewpoint of (a) Surety Storage and (b) Ada Savings Bank?Rules of debit and credit and normal balances State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries. Also, indicate its normal balance. 1. Accounts Receivable 2. Commissions Earned 3. Notes Payable 4. Patricia Mayer, Capital 5. Rent Revenue 6. Wages Expense Rules of debit and credit and normal balances State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries. Also indicate its normal balance. 1. Accounts Payable 2. Cash 3. Del Robinson, Drawing 4. Miscellaneous Expense 5. Insurance Expense 6. Fees Earned Journal entry for asset purchase Prepare a journal entry for the purchase of office equipment on October 27 for 32,750, paying 6,550 cash and the remainder on account.Journal entry for asset purchase Prepare a journal entry for the purchase of office supplies on September 30 for 2,500, paying 800 cash and the remainder on account.Journal entry for fees earned Prepare a journal entry on March 16 for fees earned on account, 9,450.Journal entry for fees earned Prepare a journal entry on August 13 for cash received for services rendered, 9,000.Journal entry for owner's withdrawal Prepare a journal entry on December 23 for the withdrawal of 20,000 by Steve Buckley for personal use.Journal entry for owner's withdrawal Prepare a journal entry on June 30 for the withdrawal of 11,500 by Dawn Pierce for personal use.2.5APE Missing amount from an account On August 1, the supplies account balance was 1,025. During August, supplies of 3,110 were purchased, and 1,324 of supplies were on hand as of August 31. Determine supplies expense for August.Trial balance errors For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a.The payment of an insurance premium of 5,400 for a three-year policy was debited to Prepaid Insurance for 5,400 and credited to Cash for 4,500. b.A payment of 270 on account was debited to Accounts Payable for 720 and credited to Cash for 720. c.A purchase of supplies on account for 1,600 was debited to Supplies for 51,600 and debited to Accounts Payable for 1,600.Trial balance errors For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a.The payment of cash for the purchase of office equipment of 12,900 was debited to Land for 12,900 and credited to Cash for 12,900. b.The payment of 1,840 on account was debited to Accounts Payable for l84 and credited to Cash for 1,840. c.The receipt of cash on account of 3,800 was recorded as a debit to Cash for 8,300 and a credit to Accounts Receivable for 3,800.Correcting entries The following errors took place in journalizing and posting transactions: a.Rent expense of 4,650 paid for the current month was recorded as a debit to Miscellaneous Expense and a credit to Rent Expense. b.The payment of 3,700 from a customer on account was recorded as a debit to Cash and a credit to Accounts Payable. Journalize the entries to correct the errors. Omit explanations.Correcting entries The following errors took place in journalizing and posting transactions: a.The receipt of 8,400 for services rendered was recorded as a debit to Accounts Receivable and a credit to Fees Earned. b.The purchase of supplies of 2,500 on account was recorded as a debit to Office Equipment and a credit to Supplies. Journalize the entries to correct the errors. Omit explanations.2.8APE 2.8BPE Chart of accounts The following accounts appeared in recent financial statements of Delta Air Lines: Accounts Payable Flight Equipment Advanced Payments for Equipment Frequent Flyer (Obligations) Air Traffic Liability Fuel Inventory Aircraft Fuel (Expense) Landing Fees (Expense) Aircraft Maintenance (Expense) Parts and Supplies Aircraft Rent (Expense) Passenger Commissions (Expense) Cargo Revenue Passenger Revenue Cash Prepaid Expenses Contract Carrier Arrangements (Expense) Taxes Payable Identify each account as either a balance sheet account or an income statement account. For each balance sheet account, identify it as an asset, a liability, or owners equity. For each income statement account, identify it as a revenue or an expense.Chart of accounts Innerscape Interiors is owned and operated by Jackie Vargo, an interior decorator. In the ledger of Innerscape Interiors, the first digit of the account number indicates its major account classification (1assets, 2liabilities, 3owners equity, 4revenues, 5expenses). The second digit of the account number indicates the specific account within each of the preceding major account classifications. Match each account number with its most likely account in the list that follows. The account numbers are 11, 12, 13, 21, 31, 32, 41, 51, 52, and 53. Accounts Payable Accounts Receivable Cash Fees Earned Jackie Vargo, Capital Jackie Vargo, Drawing Land Miscellaneous Expense Supplies Expense Wages Expense 2.3EX Rules of debit and credit The following table summarizes the rules of debit and credit. For each of the items (a) through (1), indicate whether the proper answer is a debit or a credit.2.5EX Normal balances of accounts Identify each of the following accounts of Kaiser Services Co. as asset, liability, owner's equity, revenue, or expense, and state in each case whether the normal balance is a debit or a credit: a. Accounts Payable b. Accounts Receivable c. Bobby Lund, Capital d. Bobby Lund, Drawing e. Cash f. Fees Earned g. Office Equipment h. Rent Expense i. Supplies j. Wages Expense Transactions Jardine Consulting Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Cammy Jardine, Capital; Cammy Jardine, Drawing; Fees Earned; Rent Expense; Advertising Expense; Utilities Expense; Miscellaneous Expense. Journalize the following selected transactions for March 2016 in a two-column journal. Journal entry explanations may be omitted. Mar. 1. Paid rent for the month, 2,500. 3. Paid advertising expense, 675. 5. Paid cash for supplies, 1,250. 6. Purchased office equipment on account, 9,500. 10. Received cash from customers on account, 16,550. 15. Paid creditor on account, 3,180. 27. Paid cash for repairs to office equipment, 540. 30. Paid telephone bill for the month, 375. 31. Fees earned and billed to customers for the month, 49,770. 31. Paid electricity bill for the month, 830. 31. Withdrew cash for personal use, 1,750.Journalizing and posting On January 7, 2016, Captec Company purchased 4,175 of supplies on account. In Captec Companys chart of accounts, the supplies account is No. 15, and the accounts payable account is No. 21. a. Journalize the January 7, 2016, transaction on page 33 of Captec Companys two-column journal. Include an explanation of the entry. b. Prepare a four-column account for Supplies. Enter a debit balance of 2,200 as of January 1, 2016. Place a check mark () in the Posting Reference column. c. Prepare a four-column account for Accounts Payable. Enter a credit balance of 18,430 as of January 1, 2016. Place a check mark () in the Posting Reference column. d. Post the January 7, 2016, transaction to the accounts. e. Do the rules of debit and credit apply to all companies?Transactions and T accounts The following selected transactions were completed during August of the current year: 1.Billed customers for fees earned, 73,900. 2.Purchased supplies on account, 1,960. 3.Received cash from customers on account, 62,770. 4.Paid creditors on account, 820. a.Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. Journal entry explanations may be omitted. b.Post the entries prepared in (a) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, place the appropriate number to identify the transactions. c.Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean that an error has occurred?2.10EX Account balances a.During February, 186,500 was paid to creditors on account, and purchases on account were 201,400. Assuming that the February 28 balance of Accounts Payable was 59,900, determine the account balance on February 1. b.On October 1, the accounts receivable account balance was 115,800. During October, 449,600 was collected from customers on account. Assuming that the October 31 balance was 130,770, determine the fees billed to customers on account during October. c.On April 1, the cash account balance was 46,220. During April, cash receipts totaled 248,600 and the April 30 balance was 56,770. Determine the cash payments made during April.Capital account balance As of January 1, Terrace Waters, Capital had a credit balance of 500,000. During the year, withdrawals totaled 10,000, and the business incurred a net loss of 320,000. a.Compute the balance of Terrace Waters, Capital as of the end of the year. b.Assuming that there have been no recording errors, will the balance sheet prepared at December 31 balance? Explain.Identifying transactions Wyoming Tours Co. is a travel agency. The nine transactions recorded by Wyoming Tours during June 2016, its first month of operations, are indicated in the following T accounts: Indicate for each debit and each credit: (a) whether an asset, liability, owners equity, drawing, revenue, or expense account was affected and (b) whether the account was increased(+) or decreased(). Present your answers in the following form, with transaction (1) given as an example:2.14EX Trial balance Based upon the data presented in Exercise 2-13, (a) prepare an unadjusted trial balance, listing the accounts in their proper order. (b) Based upon the unadjusted trial balance, determine the net income or net loss.Trial balance The accounts in the ledger of Hickory Furniture Company as of December 31, 2016, are listed in alphabetical order as follows. All accounts have normal balances. The balance of the cash account has been intentionally omitted. Accounts Payable 42,770 Accounts Receivable 116,900 Cash ? Rent Expense 48,000 Elaine Wells, Capita 75,000 Elaine Wells, Drawing 24,000 Fees Earned 745,230 Insurance Expense 3,600 Land 50,000 Miscellaneous Expense 9,500 Notes Payable 50,000 Prepaid Insurance 21,600 Supplies 4,275 Supplies Expense 6,255 Unearned Rent 12,000 Utilities Expense 26,850 Wages Expense 580,700 Prepare an unadjusted trial balance, listing the accounts in their normal order and inserting the missing figure for cash.Effect of errors on trial balance Indicate which of the following errors, each considered individually, would cause the trial balance totals to be unequal: a.A fee of 21,000 earned and due from a client was not debited to Accounts Receivable or credited to a revenue account, because the cash had not been received. b.A receipt of 11,300 from an account receivable was journalized and posted as a debit of 11,300 to Cash and a credit of 11,300 to Fees Earned. c.A payment of 4,950 to a creditor was posted as a debit of 4,950 to Accounts Payable and a debit of 4,950 to Cash. d.A payment of 5,000 for equipment purchased was posted as a debit of 500 to Equipment and a credit of 500 to cash. e.Payment of a cash withdrawal of 19,000 was journalized and posted as a debit of 1,900 to Salary Expense and a credit of 19,000 to Cash. Indicate which of the preceding errors would require a correcting entry.Errors in trial balance The following preliminary unadjusted trial balance of Ranger Co., a sports ticket agency, does not balance: Ranger co. unadjusted Trail Balance August 31, 2019 Debit balances Credit Balances Cash 77,600 Accounts Receivable 37,750 Prepaid insurance 12,000 Equipment 19,000 Accounts payable 29,100 Unearned Rent 10,800 Carmen Meeks, Capital 110,000 Carmen Meeks, Drawing 13,000 Fees Earned 385,000 Wages Expense 213,000 Advertising Expense 16,350 Miscellaneous Expense 18,400 273,700 668,300 When the ledger and other records are reviewed, you discover the following: (1) the debits and credits in the cash account total 77,600 and 62,100, respectively; (2) a billing of 9,000 to a customer on account was not posted to the accounts receivable account; (3) a payment of 4,500 made to a creditor on account was not posted to the accounts payable account; (4) the balance of the unearned rent account is 5,400; (5) the correct balance of the equipment account is 190,000; and (6) each account has a normal balance. Prepare a corrected unadjusted trial balance.Effect of errors on trial balance The following errors occurred in posting from a two-column journal: 1.A credit of 6,000 to Accounts Payable was not posted. 2.An entry debiting Accounts Receivable and crediting Pees Earned for 5,300 was not posted. 3.A debit of 2,700 to Accounts Payable was posted as a credit. 4.A debit of 480 to Supplies was posted twice. 5.A debit of 3,600 to Cash was posted to Miscellaneous Expense. 6.A credit of 780 to Cash was posted as 870. 7.A debit of 12,620 to Wages Expense was posted as 12,260. (a) (b) (c) Error Out of Balance Difference Larger total 1. yes 6,000 debit Considering each case individually (i.e., assuming that no other errors had occurred), indicate (a) by "yes" or "no" whether the trial balance would be out of balance; (b) if answer to (a) is ''yes," the amount by which the trial balance totals would differ; and (c) whether the Debit or Credit column of the trial balance would have the larger total. Answers should be presented in the following form, with error (1) given as an example:Errors in trial balance Identify the errors in the following trial balance. All accounts have normal balances.Entries to correct errors The following errors took place in journalizing and posting transactions: a.Insurance of 18,000 paid for the current year was recorded as a debit to Insurance Expense and a credit to Prepaid Insurance. b.A withdrawal of 10,000 by Brian Phillips, owner of the business, was recorded as a debit to Wages Expense and a credit to Cash. Journalize the entries to correct the errors. Omit explanations.Entries to correct errors The following errors took place in journalizing and posting transactions: a.Cash of 8,800 received on account was recorded as a debit to Fees Earned and a credit to Cash. b.A 1,760 purchase of supplies for cash was recorded as a debit to Supplies Expense and a credit to Accounts Payable. Journalize the entries to correct the errors. Omit explanations Horizontal analysis of income statement The following data (in millions) are taken from the financial statements of Target Corporation: a. For Target Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. What conclusions can you draw from your analysis of the revenue and the total operating expenses?Horizontal analysis of income statement The following data (in millions) were taken from the financial statements of Walmart Stores, Inc: a. For Walmart Stores, Inc., determine the amount of change in millions and the percent of change (round to one decimal p lace) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. Comment on the results of your horizontal analysis in part (a). c. Based upon Exercise 2-23, compare and comment on the operating results of Target and Walmart for the recent year.Entries into T accounts and trial balance Kimberly Manis, an architect, opened an office on January 1, 2016. During the month, she completed the following transactions connected with her professional practice: a. Transferred cash from a personal bank account to an account to be used for the business, 18,000. b. Paid January rent for office and workroom, 1,950. c. Purchased used automobile for 28,500, paying 5,700 cash and giving a note payable for the remainder. d. Purchased office and computer equipment on account, 4,500. e. Paid cash for supplies, 1,875. f. Paid cash for annual insurance policies, 3,600. g. Received cash from client for plans delivered, 13,650. h. Paid cash for miscellaneous expenses, 2,600. i. Paid cash to creditors on account, 3,000. j. Paid installment due on note payable, 950. k. Received invoice for blueprint service, due in February, 3,750. l. Recorded fees earned on plans delivered, payment to be received in February, 21,900. m. Paid salary of assistants, 4,100. n. Paid gas, oil, and repairs on automobile for January, 1,300. Instructions 1. Record these transactions directly in the following T accounts, without journalizing: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Automobiles; Equipment; Notes Payable ; Accounts Payable; Kimberly Manis, Capital; Professional Fees; Salary Expense; Blueprint Expense; Rent Expense; Automobile Expense; Miscellaneous Expense. To the left of the amount entered in the accounts, place the appropriate letter to identify the transaction. 2. Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance. 3. Prepare an unadjusted trial balance for Kimberly Manis, Architect, as of January 31, 2016. 4. Determine the net income or net loss for January.Journal entries and trial balance On August 1, 2016, Bill Hudson established Heritage Realty, which completed the following transactions during the month a. Bill Hudson transferred cash from a personal bank account to an account to be used for the business, 30,000. b. Paid rent on office and equipment for the month, 3,250. c. Purchased supplies on account, 2,150. d. Paid creditor on account, 875. e. Earned sales commissions, receiving cash, 14,440. f. Paid automobile expenses (including rental charge) for month, 1,580, and miscellaneous expenses, 650. g. Paid office salaries, 3,000. h. Determined that the cost of supplies used was 1,300. i. Withdrew cash for personal use, 2,500. Instructions 1. Journalize entries for transactions (a) through (i), using the following account titles: Cash; Supplies; Accounts Payable; Bill Hudson, Capital; Bill Hudson, Drawing; Sales Commissions; Rent Expense; Office Salaries Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. Explanations may be omitted. 2. Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance. 3. Prepare an unadjusted trial balance as of August 31, 2016. 4. Determine the following: a. Amount of total revenue recorded in the ledger. b. Amount of total expenses recorded in the ledger. c. Amount of net income for August. 5. Determine the increase or decrease in owners equity for August.Journal entries and trial balance On November 1, 2016, Patty Cosgrove established an interior decorating business, Classic Designs. During the month, Patty completed the following transactions related to the business: Nov. 1. Patty transferred cash from a personal bank account to an account to be used for the business, 27,750. 1. Paid rent for period of November 1 to end of month, 4,000. 6. Purchased office equipment on account, 12,880. 8. Purchased a truck for 32,500 paying 6,500 cash and giving a note payable for the remainder. 10. Purchased supplies for cash, 1,860. 12. Received cash for job completed, 7,500. Nov. 15. Paid annual premiums on property and casualty insurance, 2,400. 23. Recorded jobs completed on account and sent invoices to customers, 12,440. 24. Received a n invoice for truck expenses, to be paid in November, 1,100. Enter the following transactions on Page 2 of the two-column journal: 29. Paid utilities expense, 3,660. 29. Paid miscellaneous expenses, 1,700. 30. Received cash from customers on account, 8,000. 30. Paid wages of employees, 4,750. 30. Paid creditor a portion of the amount owed for equipment purchased on November 6, 6,220. 30. Withdrew cash for personal use, 2,000. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted. 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck 21 Notes Payable 22 Accounts Payable 31 Patty Cosgrove, Capital 32 Patty Cosgrove, Drawing 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Classic Designs as of November 30, 2016. 4. Determine the excess of revenues over expenses for November. 5. Can you think of any reason why the amount determined in (4) might not be the net income for November?Journal entries and trial balance Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2016, follows: The following business transactions were completed by Elite Realty during April 2016: Apr. 1. Paid rent on office for month, 6,500. 2. Purchased office supplies on account, 2,300. 5. Paid insurance premiums, 6,000. 10. Received cash from clients on account, 52,300. 15. Purchased land for a future building site for 200,000, paying 30,000 in cash and giving a note payable for the remainder. 17. Paid creditors on account, 6,450. 20. Returned a portion of the office supplies purchased on April 2, receiving full credit for their cost, 325. 23. Paid advertising expense, 4,300. Enter the following transactions on Page 19 of the two-column journal: 27. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, 2,500. 28. Paid automobile expense (including rental charges for an automobile), 1,500. 29. Paid miscellaneous expenses, 1,400. 30. Recorded revenue earned and billed to clients during the month, 57,000. 30. Paid salaries and commissions for the month, 11,900. 30. Withdrew cash for personal use, 4,000. 30. Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of 10,000. Instructions 1. Record the April 1, 2016, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for April in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of April 30, 2016. 5. Assume that the April 30 transaction for salaries and commissions should have been 19,100. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?Corrected trial balance The Colby Group has the following unadjusted trial balance as of August 31, 2016: The debit and credit totals are not equal as a result of the following errors: a. The cash entered on the trial balance was understated by 6,000. b. A cash receipt of 5,600 was posted as a debit to Cash of 6,500. c. A debit of 11,000 to Accounts Receivable was not posted. d. A return of 150 of defective supplies was erroneously posted as a 1,500 credit to Supplies. e. An insurance policy acquired at a cost of 1, 200 was posted as a credit to Prepaid Insurance. f. The balance of Notes Payable was understated by 20,000. g. A credit of 4,800 in Accounts Payable was overlooked when determining the balance of the account. h. A debit of 7,000 for a withdrawal by the owner was posted as a credit to Terry Colby, Capital. i. The balance of 58, 100 in Rent Expense was entered as 51,800 in the trial balance. j. Gas, Electricity, and Water Expense, with a balance of 24,150, was omitted from the trial balance. Instructions 1. Prepare a corrected unadjusted trial balance as of August 31, 2016. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.Entries into T accounts and trial balance Ken Jones, an architect, opened an office on April 1, 2016. During the month, he completed the following transactions connected with his professional practice: a. Transferred cash from a personal bank account to an account to be used for the business, 18,000. b. Purchased used automobile for 19,500, paying 2,500 cash and giving a note payable for the remainder. c. Paid April rent for office and workroom, 3,150. d. Paid cash for supplies, 1,450. e. Purchased office and computer equipment on account, 6,500. f. Paid cash for annual insurance policies on automobile and equipment, 2,400. g. Received cash from a client for plans delivered, 12,000. h. Paid cash to creditors on account, 1,800. i. Paid cash for miscellaneous expenses, 375. j. Received invoice for blueprint service, due in May, 2, 500. k. Recorded fees earned on plans delivered, payment to be received in May, 15,650. l. Paid salary of assistant, 2,800. m. Paid cash for miscellaneous expenses, 200. n. Paid installment due on note payable, 300. o. Paid gas, oil, and repairs on automobile for April, 550. Instructions 1. Record these transactions directly in the following T accounts, without journalizing: Cash; Accounts Receivable; Supplies; Prepaid Insurance; Automobiles; Equipment; Notes Payable; Accounts Payable; Ken Jones, Capital; Professional Fees; Rent Expense; Salary Expense; Blueprint Expense; Automobile Expense; Miscellaneous Expense. To the left of each amount entered in the accounts, place the appropriate letter to identify the transaction. 2. Determine account balances of the T accounts. Accounts containing a single entry only (such as Prepaid Insurance) do not need a balance. 3. Prepare an unadjusted trial balance for Ken Jones, Architect, as of April 30, 2016. 4. Determine the net income or net loss for April.Journal entries and trial balance On August 1, 2016, Rafael Masey established Planet Realty, which completed the following transactions during the month: a. Rafael Masey transferred cash from a personal bank account to an account to be used for the business, 17,500. b. Purchase d supplies on account, 2,300. c. Earned sales commissions, receiving cash, 13,300. d. Paid rent on office and equipment for the month, 3,000. e. Paid creditor on account, 1,150. f. Withdrew cash for personal use, 1,800. g. Paid automobile expenses (including rental charge) for month, 1,500, and miscellaneous expenses, 400. h. Paid office salaries, 2,800. i. Determined that the cost of supplies used was 1,050. Instructions 1. Journalize entries for transactions (a) through (i), using the following account titles: Cash; Supplies; Accounts Payable; Rafael Masey, Capital; Rafael Masey, Drawing; Sales Commissions; Rent Expense; Office Salaries Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. Journal entry explanations may be omitted. 2. Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance. 3. Prepare an unadjusted trial balance as of August 31, 2016. 4. Determine the following: a. Amount of total revenue recorded in the ledger. b. Amount of total expenses recorded in the ledger. c. Amount of net income for August. 5. Determine the increase or decrease in owners equity for August.Journal entries and trial balance On October 1, 2016, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business: Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business, 18,000. 4. Paid rent for period of October 4 to end of month, 3,000. 10. Purchased a used truck for 23,750, paying 3,750 cash and giving a note payable for the remainder. 13. Purchased equipment on account, 10,500. 14. Purchased supplies for cash, 2,100. 15. Paid annual premiums on property and casualty insurance, 3,600. 15. Received cash for job completed, 8,950. Enter the following transactions on Page 2 of the two-column journal: 21. Paid creditor a portion of the amount owed for equipment purchased on October 13, 2,000. 24. Recorded jobs completed on account and sent invoices to customers, 14,150. 26. Received an invoice for truck expenses, to be paid in November, 700. 27. Paid utilities expense, 2,240. Oct. 27. Paid miscellaneous expenses, 1,100. 29. Received cash from customers on account, 7,600. 30. Paid wages of employees, 4,800. 31. Withdrew cash for persona l use, 3,500. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Equipment 18 Truck 21 Notes Payable 22 Accounts Payable 31 Jay Pryor, Capital 32 Jay Pryor, Drawing 41 Fees Earned 51 Wages Expense 53 Rent Expense 54 Utilities Expense 55 Truck Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 2016. 4. Determine the excess of revenues over expenses for October. 5. Can you think of any reason why the amount determined in (4) might not be the net income for October?Journal entries and trial balance Valley Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on July 31, 2016, follows: The following business transactions were completed by Valley Realty during August 2016: Aug. 1. Purchased office supplies on account, 3, 150. 2. Paid rent on office for month, 7,200. 3. Received cash from clients on account, 83,900. Aug. 5. Paid insurance premiums, 12,000. 9. Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, 400. 17. Paid advertising expense, 8,000. 23. Paid creditors on account, 13,750. Enter the following transactions on Page 19 of the two-column journal: 29. Paid miscellaneous expenses, 1,700. 30. Paid automobile expense (including rental charges for an automobile), 2,500. 31. Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment, 2,000. 31. Paid salaries and commissions for the month, 53,000. 31. Recorded revenue earned and billed to clients during the month, 183,500. 31. Purchased land for a future building site for 75,000, paying 7,500 in cash and giving a note payable for the remainder. 31. Withdrew cash for personal use, 1,000. 31. Rented land purchase on August 31 to a local university for use as a parking lot during football season (September, October, and November); received advance payment of 5,000. Instructions 1. Record the August 1 balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark () in the Posting Reference column. 2. Journalize the transactions for August in a two-column journal beginning on Page 18. Journal entry explanations may be omitted. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance of the ledger as of August 31, 2016. 5. Assume that the August 31 transaction for Cindy Getmans cash withdrawal should have been 10,000. (a) Why did the unadjusted trial balance in (4) balance? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?Corrected trial balance Tech Support Services has the following unadjusted trial balance as of January 31, 2016: The debit and credit totals are not equal as a result of the following errors: a. The cash entered on the trial balance was overstated by 8,000. b. A cash receipt of 4,100 was posted as a debit to Cash of 1,400. c. A debit of 12,350 to Accounts Receivable was not posted. d. A return of 235 of defective supplies was erroneously posted as a 325 credit to Supplies. e. An insurance policy acquired at a cost of 3,000 was posted as a credit to Prepaid Insurance. f. The balance of Notes Payable was overstated by 21,000. g. A credit of 3,450 in Accounts Payable was overlooked when the balance of the account was determined. h. A debit of 6,000 for a withdrawal by the owner was posted as a debit to Thad Engelberg, Capital. i. The balance of 28,350 in Advertising Expense was entered as 23,850 in the trial balance. j. Miscellaneous Expense, with a balance of 4,600, was omitted from the trial balance. Instructions 1. Prepare a corrected unadjusted trial balance as of January 31, 2016. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.The transactions completed by PS Music during June 2016 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the businesss operations: July 1. Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Musics 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 music 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 Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music 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 250 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 Page 2 of the two-column journal: July 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 Music for use of its current music demos in making various music 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, 2016. 27. Paid electric bill, 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 500, with the remainder due on August 9, 2016. 31. Received 3,000 for serving as a disc jockey for a party. 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31. Withdrew 1,250 cash from PS Music for personal use. PS Musics chart of accounts and the balance of accounts as of July 1, 2016 (all normal balances), are as follows: Instructions 1. Enter the July 1, 2016, 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, 2016.Ethics and professional conduct in business At the end of the current month, Gil Frank prepared a trial balance for College App Services. The credit side of the trial balance exceeds the debit side by a significant amount. Gil has decided to add the difference to the balance of the miscellaneous expense account in order to complete the preparation of the current months financial statements by a 5 oclock deadline. Gil will look for the difference next week when he has more time. Discuss whether Gil is behaving in a professional manner.2.2CP 2.3CP 2.5CP How are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of accounting?Is the matching concept related to (a) the cash basis of accounting or (b) the accrual basis of accounting?Why are adjusting entries needed at the end of an accounting period?What is the difference between adjusting entries and correcting entries?Identify the four different categories of adjusting entries frequently required at the end of an accounting period.If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account, which of the following statements describes the effect of the credit portion of the entry? a. Increases the balance of a revenue account. b. Increases the balance of an expense account. c. Increases the balance of a liability account.If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following statements describes the effect of the debit portion of the entry? a. Increases the balance of a revenue account. b. Increases the balance of an expense account. c. Increases the balance of an asset account.Does every adjusting entry affect net income for period? Explain.9DQ (a) Explain the purpose of the two accounts: Depreciation Expense and Accumulated Depreciation. (b) What is the normal balance of each account? (c) Is it customary for the balances of the two accounts to be equal in amount? (d) In what financial statements, if any, will each account appear?Accounts requiring adjustment Indicate with a Yes or no whether or not each of the following accounts normally requires an adjusting entry: a. Building b. Cash c. Wages Expense d. Miscellaneous Expense e. Nancy Palmer, Capital f. Prepaid Insurance Accounts requiring adjustment Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. Accumulated Depreciation b. Frank Kent, Drawing c. Land d. Salaries Payable e. Supplies f. Unearned Rent Type of adjustment Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense: a. Cash received for services not yet rendered. b. Insurance paid for the next year. c. Interest revenue earned but not received. d. Salaries owed but not yet paid.3.2BPE 3.3APE Adjustment for prepaid expense The prepaid insurance account had a beginning balance of 9,600 and was debited for 12,900 of premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is 7,360.3.4APE 3.4BPE Adjustment for accrued revenues At the end of the current year, 23,570 of fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees.Adjustment for unearned revenue The balance in the unearned fees account, before adjustment at the end of the year, is 272,500. Journalize the adjusting entry (include an explanation) required if the amount of unearned fees at the end of the year is 189,750.Adjustment for prepaid expense The prepaid insurance account had a beginning balance of 4,500 and was debited for 16,600 of premiums paid during the year. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of unexpired insurance related to future periods is 5,600.Adjustment for prepaid expense The supplies account had a beginning balance of 3,375 and was debited for 6,450 for supplies purchased during the year. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of supplies on hand is 2,980.Adjustment for depreciation The estimated amount of depreciation on equipment for the current year is 6,880. Journalize the adjusting entry (include an explanation) to record the depreciation.Adjustment for depreciation The estimated amount of depreciation on equipment for the current year is 7,700. Journalize the adjusting entry (include an explanation) to record the depreciation.3.8APE 3.8BPE Effect of errors on adjusted trial balance For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a. The adjustment of 9,800 for accrued fees earned was journalized as a debit to Accounts Receivable for 9,800 and a credit to Fees Earned for 8,900. b. The adjustment of depreciation of 3,600 was omitted from the end-of-period adjusting entries.Effect of errors on adjusted trial balance For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a. The adjustment for accrued wages of 5,200 was journalized as a debit to Wages Expense for 5,200 and a credit to Accounts Payable for 5,200. b. The entry for 1,125 of supplies used during the period was journalized as a debit to Supplies Expense of 1,125 and a credit to Supplies of 1,152.3.10APE 3.10BPE 3.1EX 3.2EX 3.3EX 3.4EX 3.5EX 3.6EX Adjusting entries for prepaid insurance The prepaid insurance account had a balance of 7,000 at the beginning of the year. The account was debited for 24,000 for premiums on policies purchased during the year. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of unexpired insurance applicable to future periods is 8,500; (b) the amount of insurance expired during the year is 22,500.3.8EX 3.9EX 3.10EX Adjusting entries for unearned and accrued fees The balance in the unearned fees account, before adjustment at the end of the year, is 97,770. Of these fees, 82,220 have been earned. In addition, 34,250 of fees have been earned but have not been billed. Journalize the adjusting entries (a) to adjust the unearned fees account and (b) to record the accrued fees.3.12EX 3.13EX 3.14EX 3.15EX 3.16EX 3.17EX 3.18EX Determining fixed assets book value The balance in the equipment account is 28,650,000, and the balance in the accumulated depreciationequipment account is 16,430,000. a. What is the book value of the equipment? b. Does the balance in the accumulated depreciation account mean that the equipments loss of value is 16,430,000? Explain.3.20EX 3.21EX 3.22EX Effects of errors on financial statements The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year (34,900) and (b) accrued wages (12,770). Indicate the effect of each error, considered individually, on the income statement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to the following, and record your answers by inserting the dollar amount in the appropriate spaces. Insert a zero if the error does not affect the item. Error(a) Error(b) Over-stated Under-stated Over-stated Under-Stated 1. Revenue for the year would be 2. Expenses for the year would be 3. Net income for the year would be 4. Assets at July 31 would be 5. Liabilities at July 31 would be 6. Owners equity at July 31 would be Effects of errors on financial statements If the net income for the current year had been 196,400 in Exercise 323, what would have been the correct net income if the proper adjusting entries had been made?Adjusting entries for depreciation; effect of error On December 31, a business estimates depreciation on equipment used during the first year of operations to be 13,900. a. Journalize the adjusting entry required as of December 31. b. If the adjusting entry in (a) were o mitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of December 31?3.26EX Adjusting entries from trial balances The accountant for Evas Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the a mounts of the adjustments are correct. Identify the errors in the accountants adjusting entries, assuming that none of the accounts were affected by more than one adjusting entry.3.28EX 3.29EX 3.1APR 3.2APR 3.3APR Adjusting entries Good Note Company specializes in the repair of music equipment and is owned and operated by Robin Stahl. On November 30, 2016, the end of the current year, the accountant for Good Note Company prepared the following trial balances: Instructions Journalize the seven entries that adjusted the accounts at November 30. None of the accounts were affected by more than one adjusting entry.3.5APR Adjusting entries and errors At the end of April, the first month of operations, the following selected data were taken from the financial statements of Shelby Crawford, an attorney: Net income for April 120,000 Total assets at April 30 750,000 Total liabilities at April 30 300,000 Total owner's equity at April 30 450,000 In preparing the financial statements, adjustments for the following data were overlooked: Supplies used during April, 2,750. Unbilled fees earned at April 30, 23,700. Depreciation of equipment for April, 1,800. Accrued wages at April 30, 1,400. Instructions 1. Journalize the entries to record the omitted adjustments. 2. Determine the correct amount of net income for April and the total assets, liabilities, and owner's equity at April 30. In addition to indicating the corrected amounts, indicate the effect of each omitted adjustment by setting up and completing a columnar table similar to the following. The adjustment for supplies used is presented as an example.3.1BPR 3.2BPR 3.3BPR 3.4BPR 3.5BPR 3.6BPR The unadjusted trial balance that you prepared for PS Music at the end of Chapter 2 should appear as follows: The data needed to determine adjustments are as follows: a. During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. For information on the amount of the accrued revenue to be billed to KXMD, see the contract described in the July 3, 2016, transaction at the end of Chapter 2. b. Supplies on hand at July 31, 275. c. The balance of the prepaid insurance account relates to the July 1, 2016, transaction at the end of Chapter 2. d. Depreciation of the office equipment is 50. e. The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3, 2016, transaction at the end of Chapter 2. f. Accrued wages as of July 31, 2016, were 140. Instructions 1. Prepare adjusting journal entries. You will need the following additional accounts: 18 Accumulated DepreciationOffice Equipment 22 Wages Payable 57 Insurance Expense 58 Depreciation Expense 2. Post the adjusting entries, inserting balances in the accounts affected. 3. Prepare an adjusted trial balance.Ethics and professional conduct in business Daryl Kirby opened Squid Realty Co. on January 1, 2015. At the end of the first year, the business needed additional capital. On behalf of Squid Realty Co., Daryl applied to Ocean National Bank for a loan of 375,000. Based on Squid Realty Co.'s financial statements, which had been prepared on a cash basis, the Ocean National Bank loan officer rejected the loan as too risky. After receiving the rejection notice, Daryl instructed his accountant to prepare the financial statements on an accrual basis. These statements included 65,000 in accounts receivable and 25,000 in accounts payable. Daryl then instructed his accountant to record an additional 30,000 of accounts receivable for commissions on property for which a contract had been signed on December 28, 2015. The title to the property is to transfer on January 5, 2016, when an attorney formally records the transfer of the property to the buyer. Daryl then applied for a 375,000 loan from Free Spirit Bank, using the revised financial statements. On this application, Daryl indicated that he had not previously been rejected for credit. Discuss the ethical and professional conduct of Daryl Kirby in applying for the loan from Free Spirit Bank.Accrued revenue The following is an excerpt from a conversation between Sonia Lopez and Pete Lemke just before they boarded a flight to Paris on Delta Air Lines. They are going to Paris to attend their companys annual sales conference. Sonia: Pete, arent you taking an introductory accounting course at college? Pete: Yes, I decided its about time I learned something about accounting. You know, our annual bonuses are based on the sales figures that come from the accounting department. Sonia: I guess I never really thought about it. Pete: You should think about it! Last year, I placed a 5,000,000 order on December 30. But when I got my bonus, the 5,000,000 sale wasnt included. They said it hadnt been shipped until January 9, so it would have to count in next years bonus. Sonia: A real bummer! Pete: Right! I was counting on that bonus including the 5,000,000 sale. Sonia: Did you complain? Pete: Yes, but it didnt do any good. Julie, the head accountant, said something about matching revenues and expenses. Also, something about not recording revenues until the sale is final. I figure Id take the accounting course and find out whether shes just messing with me. Sonia: I never really thought about it. When do you think Delta Air Lines will record its revenues from this flight? Pete: Hmmm ... I guess it could record the revenue when it sells the ticket ... or ... when the boarding passes are scanned at the door ... or ... when we get off the plane ... or when our company pays for the tickets ... or ... I dont know. Ill ask my accounting instructor. Discuss when Delta Air Lines should recognize the revenue from ticket sales to properly match revenues and expenses.3.3CP Why do some accountants prepare an end-of-period spread sheet?Describe the nature of the assets that compose the following .sections of a balance sheet: (a) current assets and (b) property, plant, and equipment.3DQ 4DQ Why are closing entries required at the end of an accounting period?What is the difference between adjusting entries and closing entries?What is the purpose of the post-closing trial balance?8DQ What is the natural business year?10DQ 4.1APE Flow of accounts into financial statements The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement of owner's equity, or balance sheet. 1. Accumulated DepreciationBuilding 2. Cash 3. Fees Earned 4. Insurance Expense 5. Prepaid Rent 6. Supplies 7. Tina Greer, Drawing 8. Wages Expense Statement of owner's equity Marcie Davies owns and operates Gemini Advertising Services. On January 1, 2015, Marcie Davies, Capital had a balance of 618,500. During the year, Marcie invested an additional 40,000 and withdrew 15,000. For the year ended December 31, 2015, Gemini Advertising Services reported a net income of 92,330. Prepare a statement of owner's equity for the year ended December 31, 2015.Statement of owners equity Blake Knudson owns and operates Grab Bag Delivery Services. On January 1, 2015, Blake Knudson, Capital had a balance of 918,000. During the year, Blake made no additional investments and withdrew 15,000. For the year ended December 31, 2015, Grab Bag Delivery Services reported a net loss of 43,500. Prepare a statement of owner's equity for the year ended December 31, 2015.Classified balance sheet The following accounts appear in an adjusted trial balance of San Jose Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability; (d) long-term liability; or (e) owners equity section of the December 31, 2015, balance sheet of San Jose Consulting. 1. Building 2. Nata Foust, Capital 3. Notes Payable (due in five years) 4. Prepaid Rent 5. Salaries Payable 6. Supplies 7. Taxes Payable 8. Unearned Service Fees 4.3BPE Closing entries After the accounts have been adjusted at October 31, the end of the fiscal year, the following balances were taken from the ledger of Smart Delivery Services Co.: Fraser Smart, Capital 3,550,000 Fraser Smart, Drawing 40,000 Fees Earned 1,145,000 Wages Expense 740,000 Rent Expense 65,000 Supplies Expense 14,750 Miscellaneous Expense 8,800 Journalize the four entries required to close the accounts.Closing entries After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.: Felix Godwin, Capital 643,600 Felix Godwin, Drawing 10,500 Fees Earned 356,500 Wages Expense 283,100 Rent Expense 56,000 Supplies Expense 11,500 Miscellaneous Expense 13,000 Journalize the four entries required to close the accounts.Accounting cycle From the following list of steps in the accounting cycle, identify what two steps are missing: a.Transactions are analyzed and recorded in the journal. b.An unadjusted trial balance is prepared. c.Adjustment data are assembled and analyzed. d.An optional end-of-period spreadsheet is prepared. e.Adjusting entries are journalized and posted to the ledger. f.An adjusted trial balance is prepared. g.Closing entries are journalized and posted to the ledger. h.A post-closing trial balance is prepared.Accounting cycle From the following list of steps in the accounting cycle, identify what two steps are missing: a.Transactions are analyzed and recorded in the journal. b.Transactions are posted to the ledger. c.An unadjusted trial balance is prepared. d.An optional end-of-period spreadsheet is prepared. e.Adjusting entries are journalized and posted to the ledger. f.An adjusted trial balance is prepared. g.Financial statements are prepared. h.A post-closing trial balance is prepared.4.6APE 4.6BPE Flow of accounts into financial statements The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, statement of owner's equity, or balance sheet. 1. Accounts Payable 2. Accounts Receivable 3. Cash 4. Danny Reacher, Drawing 5. Fees Earned 6. Supplies 7. Unearned Rent 8. Utilities Expense 9. Wages Expense 10. Wages Payable 4.2EX Financial statements from the end-of-period spreadsheet Bamboo Consulting is a consulting firm owned and operated by Lisa Gooch. The following end-of-period spreadsheet was prepared for the year ended July 31, 2016: Based on the preceding spreadsheet, prepare an income statement, statement of owner's equity, and balance sheet for Bamboo Consulting.Financial statements from the end-of-period spreadsheet Elliptical Consulting is a consulting firm owned and operated by Jayson Neese. The following end-of-period spreadsheet was prepared for the year ended June 30, 2016: Based on the preceding spreadsheet, prepare an income statement, statement of owners equity, and balance sheet for Elliptical Consulting.Income statement The following account balances were taken from the adjusted trial balance for Laser Messenger Service, a delivery service firm, for the fiscal year ended April 30, 2016: Depreciation Expense 8,650 Fees Earned 674,000 Insurance Expense 1,500 Miscellaneous Expense 3,650 Rent Expense 60,000 Salaries Expense 336,900 Supplies Expense 4,100 Utilities Expense 41,200 Prepare an income statement.4.6EX 4.7EX Statement of owner's equity Apex Systems Co. offers its services to residents in the Seattle area. Selected accounts from the ledger of Apex Systems Co. for the fiscal year ended December 31, 2016, are as follows: Prepare a statement of owners equity for the year.Statement of owners equity; net loss Selected accounts from the ledger of Restoration Arts for the fiscal year ended April 30, 2016, are as follows: Prepare a statement of owners equity for the year.4.10EX Balance sheet classification At the balance sheet date, a business owes a mortgage note payable of 375,000, the terms of which provide for monthly payments of 1,250. Explain how the liability should be classified on the balance sheet.Balance sheet Optimum Weight Loss Co. offers personal weight reduction consulting services to individuals. After all the accounts have been closed on November 30, 2016, the end of the fiscal year, the balances of selected accounts from the ledger of Optimum Weight Loss Co. are as follows: Accounts Payable 37,700 Accounts Receivable 116,750 Accumulated Depreciation-Equipment 186,400 Cash ? Equipment 474,150 Land 300,000 Prepaid Insurance 7,200 Prepaid Rent 21,000 Salaries Payable 9,000 Cheryl Viers, Capital 710,300 Supplies 4,800 Unearned Fees 18,000 Pre pare a classified balance sheet that includes the correct balance for Cash.4.13EX 4.14EX Closing entries Prior to its closing, Income Summary had total debits of 1,190,500 and total credits of 1,476,300. Briefly explain the purpose served by the income summary account and the nature of the entries that resulted in the 1,190,500 and the 1,476,300.Closing entries with net income After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of 798,400 and a credit of 955,300. At the same date, Debra Allen, Capital has a credit balance of 1,439,000, and Debra Allen , Drawing has a balance of 36,000. (a) Journalize the entries required to complete the closing of the accounts. (b) Determine the amount of Debra Allen, Capital at the end of the period.Closing entries with net loss Mira Services Co. offers its services to individuals desiring to improve their personal images. After the accounts have been adjusted at October 31, the end of the fiscal year, the following balances were taken from the ledger of Mira Services Co.: Bonnie Mira, Capital 910,000 Bonnie Mira, Drawing 16,000 Fees Earned 519,300 Wages Expense 488,000 Rent Expense 72,000 Supplies Expense 11,900 Miscellaneous Expense 14,250 Journalize the four entries required to close the accounts.4.18EX 4.19EX Steps in the accounting cycle Rearrange the following steps in the accounting cycle in proper sequence: a. A post-closing trial balance is prepared. b. Adjustment data are asssembled and analyzed. c. Adjusting entries are journalized and posted to the ledger. d. An adjusted trial balance is prepared. e. An optional end-of-period spreadsheet is prepared. f. An unadjusted trial balance is prepared. g. Closing entries are journalized and posted to the ledger. h. Financial statements are prepared. i. Transactions are analyzed and recorded in the journal. j. Transactions are posted to the ledger.4.21EX 4.22EX Completing an end-of-period spreadsheet List (a) through (j) in the order they would be performed in preparing and completing an end-of-period spreadsheet. a.Add the Debit and Credit columns of the Unadjusted Trial Balance columns of the spreadsheet to verify that the totals are equal. b.Add the Debit and Credit columns of the Balance Sheet and Income Statement columns of the spreadsheet to verify that the totals are equal. c.Add or deduct adjusting entry data to trial balance amounts, and extend amounts to the Adjusted Trial Balance columns. d.Add the Debit and Credit columns of the Adjustments columns of the spreadsheet to verify that the totals are equal. e.Add the Debit and Credit columns of the Balance Sheet and Income Statement columns of the spreadsheet to determine the amount of net income or net loss for the period. f.Add the Debit and Credit columns of the Adjusted Trial Balance columns of the spreadsheet to verify that the totals are equal. g.Enter the adjusting entries into the spreadsheet, based on the adjustment data. h.Enter the amount of net income or net loss for the period in the proper Income Statement column and Balance Sheet column. i.Enter the unadjusted account balances from the general ledger into the Unadjusted Trial Balance columns of the spreadsheet. j.Extend the adjusted trial balance amounts to the Income Statement columns and the Balance Sheet columns.4.24EX 4.25EX Appendix Completing an end-of-period spreadsheet Alert Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet for Alert Security Services Co.: Appendix Financial statements from an end-of-period spreadsheet Based on the data in Exercise 4-25, prepare an income statement, statement of owners equity, and balance sheet for Alert Security Services Co.Appendix Adjustment data on an end-of-period spreadsheet Alert Security Services Co. offers security services to business clients. The trial balance for Alert Security Services Co. has been prepared on the following end-of-period spreadsheet for the year ended October 31, 2016: The data for year-end adjustments are as follows: a. Fees earned, but not yet billed, 13. b. Supplies on hand, 4. c. Insurance premiums expired, 10. d. Depreciation expense, 3. e. Wages accrued, but not paid, 1. Enter the adjustment data, and place the balances in the Adjusted Trial Balance columns. Appendix EX 4-27 Adjusting entries from an end-of-period spreadsheet Based on the data in Exercise 4-24, prepare the adjusting entries for Alert Security Services Co.Appendix Completing an end-of-period spreadsheet Alert Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet for Alert Security Services Co.: Appendix Closing entries from an end-of-period spreadsheet Based on the data in Exercise 4-25, prepare the closing entries for Alert Security Services Co.4.1APR Financial statements and closing entries Finders Investigative Services is an investigative services firm that is owned and operated by Stacy Tanner. On June 30, 2016, the end of the fiscal year, the accountant for Finders Investigative Services prepared an end-of-period spreadsheet, a part of which follows: Instructions 1. Prepare an income statement, a statement of owners equity (no additional investments were made during the year), and a balance sheet. 2. Journalize the entries that were required to close the accounts at June 30. 3. If Stacy Tanner, Capital has instead decreased 30,000 after the closing entries were posted, and the withdrawals remained the same, what would have been the amount of net income or net loss?T accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Epicenter Laundry at June 30, 2016, the end of the fiscal year, follows: The data needed to determine year-end adjustments are as follows: a. Laundry supplies on hand at June 30 are 3,600. b. Insurance premiums expired during the year are 5,700. c. Depreciation of laundry equipment during the year is 6,500. d. Wages accrued but not paid at June 30 are 1,100. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as "June 30 Bal." In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, Insurance Expense, and Income Summary. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3. Journalize and post the adjusting entries. Identify the adjustments by "Adj. and the new balances as Adj. Bal. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.Ledger accounts, adjusting entries, financial statements, and closing entries; optional spreadsheet The unadjusted trial balance of Lakota Freight Co. at March 31, 2016, the end of the year, follows: The data needed to determine year-end adjustments are as follows: a. Supplies on hand at March 31 are 7,500. b. Insurance premiums expired during year are 1,800. c. Depreciation of equipment during year is 8,350. d. Depreciation of trucks during year is 6,200. e. Wages accrued but not paid at March 31 are 600. Instructions 1. For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Lakota Freight Co.s chart of accounts should be used: Wages Payable, 22; Supplies Expense, 52; Depreciation ExpenseEquipment, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owner's equity (no additional investments were made during the year) and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.Complete accounting cycle For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2016, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full -time basis. Diamond Consulting entered into the following transactions during July: July 1. The following assets were received from Steffy Lopez: cash, 13,500; accounts receivable, 20,800; supplies, 3,200; and office equipment, 7,500. There were no liabilities received. 1. Paid two months rent on a lease rental contract, 4,800. 2. Paid the premiums on property and casualty insurance policies, 4,500. 4. Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, 5,500. 5. Purchased additional office equipment on account from Office Station Co., 6,500. 6. Received cash from clients on account, 15,300. 10. Paid cash for a newspaper advertisement, 400. 12. Paid Office Station Co. for part of the debt incurred on July 5, 5,200. 12. Recorded services provided on account for the period July 112, 13,300. 14. Paid receptionist for two weeks' salary, 1,750. Record the following transactions on Page 2 of the journal: 17. Recorded cash from cash clients for fees earned during the period July 117, 9,450. 18. Paid cash for supplies, 600. 20. Recorded services provided on account for the period July 1320, 6,650. 24. Recorded cash from cash clients for fees earned for the period July 1724, 4,000. 26. Received cash from clients on account, 12,000. 27. Paid receptionist for two weeks' salary, 1,750. 29. Paid telephone bill for July, 325. 31. Paid electricity bill for July, 675. 31. Recorded cash from cash clients for fees earned for the period July 2531, 5,200. July 31. Recorded services provided on account for the remainder of July, 3,000. 31. Steffy withdrew 12,500 for personal use. Instructions 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees 31 Steffy Lopez, Capital 32 Steffy Lopez, Drawing 41 Fees Earned 51 Salary Expense 52 Rent Expense 53 Supplies Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during July is 375. b. Supplies on hand on July 31 are 1,525. c. Depreciation of office equipment for July is 750. d. Accrued receptionist salary on July 31 is 175. e. Rent expired during July is 2,400. f. Unearned fees on July 31 are 2,750. 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 3 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owner's equity, and a balance sheet. 9. Prepare and post the closing entries. (Income Summary is account #33 in the chart of accounts.) Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.Financial statements and closing entries Last Chance Company offers legal consulting advice to prison inmates. Last Chance Company prepared the end-of-period spreadsheet that follows at June 30, 2016, the end of the fiscal year. Instructions 1. Prepare an income statement for the year ended June 30. 2. Prepare a statement of owner's equity for the year ended June 30. No additional investments were made during the year. 3. Prepare a balance sheet as of June 30. 4. On the basis of the end-of-period spreadsheet, journalize the closing entries. 5. Prepare a post-closing trial balance.Financial statements and closing entries The Gorman Group is a financial planning services firm owned and operated by Nicole Gorman. As of October 31, 2016, the end of the fiscal year, the accountant for The Gorman Group prepared an end-of-period spreadsheet, part of which follows: Instructions 1. Prepare an income statement, a statement of owners equity (no additional investments were made during the year), and a balance sheet. 2. Journalize the entries that were required to close the accounts at October 31. 3. If the balance of Nicole Gorman, Capital had instead increased 115,000 after the closing entries were posted, and the withdrawals remained the same, what would have been the amount of net income or net loss?T accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of La Mesa Laundry at August 31, 2016, the end of the fiscal year, follows: The data needed to determine year-end adjustments are as follows: a. Wages accrued but not paid at August 31 are 2,200. b. Depreciation of equipment during the year is 8,150. c. Laundry supplies on hand at August 31 are 2,000. d. Insurance premiums expired during the year are 5,300. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as Aug. 31 Bal. In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, Insurance Expense, and Income Summary. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (1) as needed. 3. Journalize and post the adjusting entries. Identify the adjustments by Adj. and the new balances as Adj. Bal. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Identify the closing entries by Clos. 7. Prepare a post-closing trial balance.Ledger accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Recessive Interiors at January 31, 2016, the end of the year, follows: The data needed to determine year-end adjustments are as follows: a. Supplies on hand at January 31 are 2,850. b. Insurance premiums expired during the year are 3,150. c. Depreciation of equipment during the year is 5,250. d. Depreciation of trucks during the year is 4,000. e. Wages accrued but not paid at January 31 are 900. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Recessive Interiors chart of accounts should be used: Wages Payable, 22; Depreciation ExpenseEquipment, 54; Supplies Expense, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owners equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.Complete accounting cycle For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 2016, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud Consulting entered into the following transactions during April: Apr. 1. The following assets were received from Jeff Horton: cash, 20,000; accounts receivable, 14,700; supplies, 3,300; and office equipment, 12,000. There were no liabilities received. 1. Paid three months rent on a lease rental contract, 6,000. 2. Paid the premiums on property and casualty insurance policies, 4,200. 4. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 9,400. 5. Purchased additional office equipment on account from Smith Office Supply Co., 8,000. 6. Received cash from clients on account, 11,700. 10. Paid cash for a newspaper advertisement, 350. 12. Paid Smith Office Supply Co. for part of the debt incurred on April 5, 6,400. 12. Recorded services provided on account for the period April 112, 21,900. 14. Paid receptionist for two weeks' salary, 1,650. Record the following transactions on Page 2 of the journal: 17. Recorded cash from cash clients for fees earned during the period April 116, 6,600. 18. Paid cash for supplies, 725. 20. Recorded services provided on account for the period April 1320, 16,800. 24. Recorded cash from cash clients for fees earned for the period April 1724, 4,450. 26. Received cash from clients on account, 26,500. 27. Paid receptionist for two weeks salary, 1,650. 29. Paid telephone bill for April, 540. 30. Paid electricity bill for April, 760. 30. Recorded cash from cash clients for fees earned for the period April 2530, 5,160. 30. Recorded services provided on account for the remainder of April, 2,590. 30. Jeff withdrew 18,000 for personal use. Instructions 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 11 Cash 12 Accounts Receivable 14 Supplies 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation 21 Accounts Payable 22 Salaries Payable 23 Unearned Fees 31 Jeff Horton, Capital 32 Jeff Horton, Drawing 41 Fees Earned 51 Salary Expense 52 Supplies Expense 53 Rent Expense 54 Depreciation Expense 55 Insurance Expense 59 Miscellaneous Expense 2. Post the journal to a ledger of four-column accounts. 3. Prepare an un adjusted trial balance. 4. At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during April is 350. b. Supplies on hand o n April 30 are 1,225. c. Depreciation of office equipment for April is 400. d. Accrued receptionist salary on April 30 is 275. e. Rent expired during April is 2,000. f. Unearned fees on April 30 are 2,350. 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 3 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owner's equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. (Income Summary is account #33 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.The unadjusted trial balance of PS Music as of July 31, 2016, along with the adjustment data for the two months ended July 31, 2016, are shown in Chapter 3. Based upon the adjustment data, the following adjusted trial balance was prepared: Instructions l. (Optional) Using the data from Chapter 3, prepare an end-of-period spreadsheet. 2. Prepare an income statement, a statement of owner's equity, and a balance sheet. (Note: Peyton Smith made investments in PS Music on June 1 and July 1, 2016.) 3. Journalize and post the closing entries. The retained earnings account is #33 and the income summary account is #34 in the ledger of PS Music. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 4. Prepare a post-closing trial balance.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 115, 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 116, 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 1620, 4,820. 25. Recorded cash from cash clients for fees earned for the period May 1723, 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 2631, 3,300. 31. Recorded services provided on account for the remainder of May, 2,650. 31. Kelly withdrew 10,500 for personal use. 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 statement of owners equity, 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 #33 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.4.1CP Financial statements The following is an excerpt from a telephone conversation between Ben Simpson, president of Main Street Co., and Tami Lundgren, owner of Reliable Employment Co.: Ben: Tami, you're going to have to do a better job of finding me a new computer programmer. That last guy was great at programming, but he didn't have any common sense. Tami: What do you mean? The guy had a master's degree with straight A's. Ben: Yes, well, last month he developed a new financial reporting system. He said we could do away with manually preparing an end-of-period spreadsheet and financial statements. The computer would automatically generate our financial statements with a push of a button. Tami: So what's the big deal? Sounds to me like it would save you time and effort. Ben: Right! The balance sheet showed a minus for supplies! Tami: Minus supplies? How can that be? Ben: That's what I asked. Tami: So, what did he say? Ben: Well, after he checked the program, he said that it must be right. The minuses were greater than the pluses.... Tami: Didn't he know that Supplies can't have a credit balanceit must have a debit balance? Ben: He asked me what a debit and credit were. Tami: I see your point. 1.Comment on (a) the desirability of computerizing Main Street Co.'s financial reporting system, (b) the elimination of the end-of-period spreadsheet in a computerized accounting system, and (c) the computer programmer's lack of accounting knowledge. 2.Explain to the programmer why Supplies could not have a credit balance.Financial statements Assume that you recently accepted a position with Five Star National Bank Trust as an assistant loan officer. As one of your first duties, you have been assigned the responsibility of evaluating a loan request for 300,000 from West Gate Auto Co., a small proprietorship. In support of the loan application, Joan Whalen, owner, submitted a Statement of Accounts (trial balance) for the first year of operations ended October 31, 2016. 1. Explain to Joan Whalen why a set of financial statements (income statement, statement of owners equity, and balance sheet) would be useful to you in evaluating the loan request. 2. In discussing the Statement of Accounts with Joan Whalen, you discovered that the accounts had not been adjusted at October 31. Analyze the Statement of Accounts and indicate possible adjusting entries that might be necessary before an accurate set of financial statements could be prepared. 3. Assuming that an accurate set of financial statements will be submitted by Joan Whalen in a few days, what other considerations or information would you require before making a decision on the loan request?Why would a company maintain separate accounts receivable ledgers for each customer, as opposed to maintaining a single accounts receivable ledger for all customers?What are the major advantages of the use of special journals?3DQ How many postings to Fees Earned for the month would be needed in Discussion Question 3 if the procedure described in (a) had been used; if the procedure described in (b) had been used?During the current month, the following errors occurred in recording transactions in the purchases journal or in posting from it: a.An invoice for 1,875 of supplies from Kelly Co. was recorded as having been received from Kelley Co., another supplier. b.A credit of 420 to Blackstone Company was posted as 240 in the subsidiary ledger. c.An invoice for equipment of 4,800 was recorded as 4,000. d.The Accounts Payable column of the purchases journal was overstated by 3,600.6DQ What is an electronic form, and how is it used in a computerized accounting system?8DQ What happens to the special journal in a computerized accounting system that uses electronic forms?10DQ Revenue journal The following revenue transactions occurred during November: Oct. 4. Issued Invoice No. 162 to Dawkins Co. for services provided on account, 320. 19. Issued Invoice No. 163 to City Electric Inc. for services provided on account, 245. 25. Issued Invoice No. 164 to Matthews Co. for services provided on account, 515. Record these three transactions into the following revenue journal format:Revenue journal The following revenue transactions occurred during April: Apr.6. Issued Invoice No. 78 to Lemon Co. for services provided on account, 1,240. 11. Issued Invoice No. 79 to Hitchcock Inc. for services provided on account, 2,570. 19. Issued Invoice No. 80 to Fletcher Inc. for services provided on account, 990. Record these three transactions in the following revenue journal format: REVENUE JOURNAL Invoice Post. Accts. Rec. Dr. Date No. Account Debited Ref. Fees Earned Cr.Accounts receivable subsidiary ledger The debits and credits from two transactions are presented in the following customer account: Describe each transaction and the source of each posting.Accounts receivable subsidiary ledger The debits and credits from two transactions are presented in the following customer account: Describe each transaction and the source of each posting.5.3BPE Purchases journal The following purchase transactions occurred during March for Celebration Catering Service: Mar. 11. Purchased party supplies for 610, on account from Party Hearty Supplies Inc. 16. Purchased party supplies for 312, on account from Fun 4 All Supplies Inc. 27. Purchased office furniture for 2,480, on account from Office Space Inc. Record these transactions in the following purchases journal format:Accounts payable subsidiary ledger The debits and credits from two transactions are presented in the following creditors (suppliers) account: Describe each transaction and the source of each posting.Accounts payable subsidiary ledger The debits and credits from two transactions are presented in the following creditors (suppliers) account: Describe each transaction and the source of each posting.Segment analysis McHale Company does business in two customer segments, Retail and Wholesale. The following annual revenue information was determined from the accounting systems invoice information: Prepare a horizontal and vertical analysis of the segments. Round to one decimal place.5.5BPE Identify postings from revenue journal Using the following revenue journal for Zeta Services Inc., identify each of the posting references, indicated by a letter, as representing (1) posting to general ledger accounts or (2) posting to subsidiary ledger accounts:Accounts receivable ledger Based on the data presented in Exercise 5-1, assume that the beginning balances for the customer accounts were zero, except for Sunrise Enterprises, which had a 480 beginning balance. In addition, there were no collections during the period. a. Set up a T account for Accounts Receivable and T accounts for the four accounts needed in the customer ledger. b. Post to the T accounts. c. Determine the balance in the accounts. d. Prepare a listing of the accounts receivable customer balances as of March 31, 2016.Identify journals Assuming the use of a two-column (all-purpose) general journal, a revenue journal, and a cash receipts journal as illustrated in this chapter, indicate the journal in which each of the following transactions should be recorded: a. Closing of drawing account at the end of the year. b. Providing services for cash. c. Sale of office supplies on account, at cost, to a neighboring business. d. Receipt of cash from sale of office equipment. e. Receipt of cash for rent. f. Receipt of cash on account from a customer. g. Providing services on account. h. Investment of additional cash in the business by the owner. i. Receipt of cash refund from overpayment of taxes. j. Adjustment to record accrued salaries at the end of the year.Identify journals Assuming the use of a two-column (all-purpose) general journal, a purchases journal, and a cash payments journal as illustrated in this chapter, indicate the journal in which each of the following transactions should be recorded: a. Purchase of office supplies for cash. b. Advance payment of a one-year fire insurance policy on the office. c. Purchase of office equipment for cash. d. Adjustment to prepaid insurance at the end of the month. e. Adjustment to prepaid rent at the end of the month. f. Adjustment to record accrued salaries at the end of the period. g. Purchase of services on account. h. Purchase of office supplies on account. i. Adjustment to record depreciation at the end of the month. j. Payment of six months rent in advance. k. Purchase of an office computer on account.Identify transactions in accounts receivable subsidiary ledger The debits and credits from three related transactions are presented in the following customer's account taken from the accounts receivable subsidiary ledger: Describe each transaction, and identify the source of each posting.5.6EX

Page: [1][2][3][4][5][6]