Financial & Managerial Accounting
Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 2, Problem 2.4BPR

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, 2018, follows:

Chapter 2, Problem 2.4BPR, Journal entries and trial balance Valley Realty acts as an agent in buying, selling, renting, and

The following business transactions were completed by Valley Realty during August 2018:

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.
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. Paid dividends, $1,000.
31. Rented land purchased 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. 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 (*0 in the Posting Reference column.
  2. 2. Journalize the transactions for August in a two-column journal beginning on Page 18. Journal entry explanations may be omitted.
  3. 3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.
  4. 4. Prepare an unadjusted trial balance of the ledger as of August 31, 2018.
  5. 5. Assume that the August 31 transaction for dividends 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?

(2) and (3)

Expert Solution
Check Mark
To determine

Journal:

Journal is the book of original entry. Journal consists of the day today financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

Rules of debit and credit:

“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.

Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.

T-account:

An account is referred to as a T-account, because the alignment of the components of the account resembles the capital letter ‘T’. An account consists of the three main components which are as follows:

  • The title of the account
  • The left or debit side
  • The right or credit side

Unadjusted trial balance:

The unadjusted trial balance is the summary of all the ledger accounts that appears on the ledger accounts before making adjusting journal entries.

Slide error:

A slide error occurs, when the decimal point of an amount has been misplaced.

To journalize: The transactions of August in a two column journal beginning on page 18.

Explanation of Solution

Journalize the transactions of August in a two column journal beginning on page 18.

                                                   Journal                                           Page 18
Date Description Post. Ref Debit ($) Credit ($)
2018   Office supplies 14 3,150  
August  1     Accounts payable 21   3,150
    (To record the purchase of supplies of account)      
 
   2. Rent expense 52 7,200  
        Cash 11   7,200
    (To record the payment of rent)      
           
  3 Cash 11 83,900  
    Accounts receivable 12   83,900
    (To record the receipt of cash from clients)      
 
   5 Prepaid insurance 13 12,000  
        Cash 11   12,000
    (To record the payment of insurance premium)      
 
  9 Accounts payable  21 400  
     Office supplies 14   400
    (To record the payment made to creditors on account)      
 
  17 Advertising expense 53 8,000  
         Cash 11   8,000
    (To record the payment of advertising expense)      
 
  23 Accounts payable 21 13,750  
        Cash 11   13,750
    (To record the payment made to creditors on account)      

Table (1)

                                                   Journal                                           Page 19
Date Description Post. Ref Debit ($) Credit ($)
2018 29 Miscellaneous expense 59 1,700  
August       Cash 11   1,700
    (To record the payment made for Miscellaneous expense)      
 
  30 Automobile expense 54 2,500  
        Cash 11   2,500
    (To record the payment made for automobile expense)      
 
  31 Cash 11 2,000  
        Salary and commission expense 51   2,000
    (To record the receipt of cash)      
 
  31 Salary and commission expense 51 53,000  
        Cash 11   53,000
    (To record the payment made for salary and commission expense)      
 
  31 Accounts receivable 12 183,500  
    Fees earned 41   183,500
    (To record the revenue earned and billed)      
 
  31 Land 16 75,000  
        Cash 11   7,500
        Notes payable 23   67,500
    (To record the purchase of land party for cash and party on signing a note)      
 
  31 Dividends 33 1,000  
         Cash 11   1,000
    (To record the drawing made for personal use)      
 
  31 Cash 11 5,000  
    Unearned rent 22   5,000
    (To record the cash received for the service yet to be provide)      

Table (2)

(1) and (3)

Expert Solution
Check Mark
To determine

To record: The beginning balances of each accounts in the appropriate balance column of a four-column account, and post them to the ledger extending the account balance to the appropriate balance column after each posting.

Explanation of Solution

Solution:

Account:         Cash                                                              Account no. 11
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       52,500  
  2   18   7,200 45,300  
  3   18 83,900   129,200  
  5   18   12,000 117,200  
  17   18   8,000 109,200  
  23   18   13,750 95,450  
  29   19   1,700 93,750  
  30   19   2,500 91,250  
  31   19 2,000   93,250  
  31   19   53,000 40,250  
  31   19   7,500 32,750  
  31   19   1,000 31,750  
  31   19 5,000   36,750  

Table (3)

Account:    Accounts Receivable                                             Account no. 12
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       100,100  
  3   18   83,900 16,200  
  31   19 183,500   199,700  

Table (4)

Account:    Prepaid Insurance                                             Account no. 13
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       12,600  
  5   18 12,000   24,600  

Table (5)

Account:    Office Supplies                                             Account no. 14
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       2,800  
  1   18 3,150   5,950  
  9   18   400 5,550  

Table (6)

Account:    Land                                                               Account no. 16
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 31   19 75,000   75,000  

Table (7)

Account:     Accounts Payable                                                      Account no. 21
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓         21,000
  1   18   3,150   24,150
  9   18 400     23,750
  23   18 13,750     10,000

Table (8)

Account:          Unearned Rent                                                   Account no. 22
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 31   19   5,000   5,000

Table (9)

Account:   Notes Payable                                                       Account no. 23
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 31   19   67,500   67,500

Table (11)

Account:          Common stock                                                     Account no. 31
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓         17,500

Table (12)

Account:          Retained earnings                                                  Account no. 32
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓         70,000

Table (13)

Account:          Dividends                                                               Account no. 33
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       44,800  
  31   19 1,000   45,800  

Table (13)

Account:          Fees earned                                                         Account no. 41
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓         591,500
  31   19   183,500   775,000

Table (14)

Account:   Salary and commission expense                                Account no. 51
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       385,000  
  31   19   2,000 383,000  
  31   19 53,000   436,000  

Table (15)

Account:   Rent expense                                                              Account no. 52
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       49,000  
  2   18 7,200   56,200  

Table (16)

Account:   Advertising expense                                                     Account no. 53
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       32,200  
  17   18 8,000   40,200  

Table (17)

Account:   Automobile expense                                                     Account no. 54
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       15,750  
  30   19 2,500   18,250  

Table (19)

Account:   Miscellaneous expense                                                   Account no. 59
Date Item Post. Ref

Debit

 ($)

Credit ($) Balance
Debit ($) Credit ($)
2018            
August 1 Balance ✓       5,250  
  29   19 1,700   6,950  

Table (20)

(4)

Expert Solution
Check Mark
To determine

To prepare: An unadjusted trial balance of Company V at August 31, 2018.

Explanation of Solution

Prepare an unadjusted trial balance of Company V at August 31, 2018 as follows:

Company V

Unadjusted Trial Balance

August 31, 2018

Particulars

Account

No.

Debit $ Credit $
Cash 11 36,750  
Accounts receivable 12 199,700  
Prepaid insurance 13 24,600  
Office supplies 14 5,550
Land 16 75,000
Accounts payable 21   10,000
Unearned rent 22   5,000
Notes payable 23   67,500
Common stock 31   17,500
Retained earnings 32   70,000
Dividends 33 45,800  
Fees earned 41 775,000
Salaries and commission expense 51 436,000  
Rent expense 52 56,200  
Advertising expense 53 40,200  
Automobile expense 54 18,250  
Miscellaneous expense 59 6,950  
Total 945,000 945,000

Table (20)

The debit column and credit column of the unadjusted trial balance are agreed, both having balance of $945,000.

(5) (a)

Expert Solution
Check Mark
To determine

To explain: Whetherthe unadjusted trial balance in (4) balance

Explanation of Solution

The unadjusted trial balance in (4) would still balance, since the debit equalized the credit in the original journal entry.

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Chapter 2 Solutions

Financial & Managerial Accounting

Ch. 2 - Rules of debit and credit and normal balances...Ch. 2 - Journal entry for asset purchase Prepare a journal...Ch. 2 - Journal entry for fees earned Prepare a journal...Ch. 2 - Journal entry for dividends Prepare a journal...Ch. 2 - Missing amount from an account On August 1, the...Ch. 2 - Trial balance errors For each of the following...Ch. 2 - Correcting entries The following errors took place...Ch. 2 - Prob. 2.1EXCh. 2 - Chart of accounts Innerscape Interiors is owned...Ch. 2 - Chart of accounts LeadCo School is a newly...Ch. 2 - Rules of debit and credit The following table...Ch. 2 - Normal entries for accounts During the month,...Ch. 2 - Normal balances of accounts Identify each of the...Ch. 2 - Transactions Zenith Consulting Co. has the...Ch. 2 - Journalizing and posting On October 3, 2018, Regal...Ch. 2 - Transactions and T accounts The following selected...Ch. 2 - Cash account balance During the month, Warwick Co....Ch. 2 - Account balances A. During February, 186,500 was...Ch. 2 - Retained earnings account balance As of January 1,...Ch. 2 - Identifying transactions Napa Tours Co. is a...Ch. 2 - Journal entries Based upon the T accounts in...Ch. 2 - Trial balance Based upon the data presented in...Ch. 2 - Trial balance The accounts in the ledger of...Ch. 2 - Effect of errors on trial balance Indicate which...Ch. 2 - Errors in trial balance The following preliminary...Ch. 2 - Effect of errors on trial balance The following...Ch. 2 - Prob. 2.20EXCh. 2 - Entries to correct errors The following errors...Ch. 2 - Entries to correct errors The following errors...Ch. 2 - Entries into T accounts and trial balance Marjorie...Ch. 2 - Journal entries and trial balance On October 1,...Ch. 2 - Journal entries and trial balance On November 1,...Ch. 2 - Journal entries and trial balance Elite Realty...Ch. 2 - Corrected trial balance The Lexington Group has...Ch. 2 - Entries into T accounts and trial balance Ken...Ch. 2 - Journal entries and trial balance On August 1,...Ch. 2 - Journal entries and trial balance On October 1,...Ch. 2 - Journal entries and trial balance Valley Realty...Ch. 2 - Corrected trial balance Tech Support Services has...Ch. 2 - The transactions completed by PS Music during June...Ch. 2 - Prob. 1ADMCh. 2 - Prob. 2ADMCh. 2 - Target: Horizontal analysis The following data (in...Ch. 2 - Prob. 4ADMCh. 2 - Prob. 2.1TIF
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    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: 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?
    Journal entries and trial balance On October 1, 20Y6, Jay Crowley established Affordable Realty, which completed the following transactions during the month: a. Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, 40,000. b. Paid rent on office and equipment for the month, 4,800. c. Purchased supplies on account, 2,150. d. Paid creditor on account, 1,100. e. Earned sales commissions, receiving cash, 18,750. f. Paid automobile expenses (including rental charge) for month, 1,580, and miscellaneous expenses, 800. g. Paid office salaries, 3,500. h. Determined that the cost of supplies used was 1,300. i. Paid dividends, 1,500. Instructions 1. Journalize entries for transactions (a) through (i), using the following account titles: Cash, Supplies, Accounts Payable, Common Stock, Dividends, 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 October 31, 20Y6. 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 October. 5. Determine the increase or decrease in retained earnings for October.
  • Journal entries and trial balance On October 1, 20Y4, 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 in exchange for common stock, 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. Oct. 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. 27. Paid miscellaneous expenses, 1,100. 29. Received cash from customers on account, 7,600. 30. Paid wages of employees, 4,800. 31. Paid dividends, 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 Common Stock 33 Dividends 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, 20Y4. 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?
    The transactions completed by PS Music during June 2019 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 cash from customers 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 to creditors 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: 16.Received 2,000 for serving as a disc jockey for a wedding reception. 18.Purchased supplies on account, 850. July 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, 2019. 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, 2019. 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, 2019 (all normal balances), are as follows: Instructions 1. Enter the July 1, 2019, 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, 2019.
    The transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business's operations: July 1. Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Music's 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 cash from customers 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 SO hours per month for a monthly fee of 3,600. Any additional hours beyond SO 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 to creditors 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. 11. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. July 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, 2019. 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, 2019. 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 l,250 cash from PS Music for personal use. PS Music's chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: 11 Cash 3,920 12 Accounts receivable 1,000 14 Supplies 170 15 Prepaid insurance 17 Office Equipment 21 Accounts payable 250 23 Unearned Revenue 31 Peyton smith, Drawing 4,000 32 Fees Earned 500 41 Wages Expense 6,200 50 Office Rent Expense 400 51 Equipment Rent Expense 800 52 Utilities Expense 675 53 Supplies Expense 300 54 music Expense 1,590 55 Advertising Expense 500 56 Supplies Expense 180 59 Miscellaneous Expense 415 Instructions 1.Enter the July 1, 2019, 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, 2019.
  • Entries into T accounts and trial balance Marjorie Knaus, an architect, organized Knaus Architects on January 1, 20Y4. During the month, Knaus Architects completed the following transactions: a. Issued common stock to Marjorie Knaus in exchange for 30,000. b. Paid January rent for office and workroom, 2,500. c. Purchased used automobile for 28,500, paying 6,000 cash and giving a note payable for the remainder. d. Purchased office and computer equipment on account, 8,000. e. Paid cash for supplies, 2,100. f. Paid cash for annual insurance policies, 3,600. g. Received cash from client for plans delivered, 9,000. h. Paid cash for miscellaneous expenses, 2,600. i. Paid cash to creditors on account, 4,000. j. Paid installment due on note payable, 1,875. k. Received invoice for blueprint service, due in February, 5,500. l. Recorded fees earned on plans delivered, payment to be received in February, 31,400. m. Paid salary of assistants, 6,000. 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, Common Stock, 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 Knaus Architects as of January 31, 20Y4. 4. Determine the net income or net loss for January.
    The transactions completed by PS Music during June 2018 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 Musk in exchange for common stock by depositing 5,000 in PS Music s 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 lage 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. 21. Paid 620 to Upload 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, 2018. 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, 2018. 31. Received 3,000 for serving as a disc jockey for a party. July 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31. Paid dividends, 1,250. PS Musics chart of accounts and the balance of accounts as of July 1, 2018 (all normal balances), are as follows: 11 Cash 3,920 41 Fees Earned 6,200 12 Accounts Receivable 1,000 50 Wages Expense 400 14 Supplies 170 51 Office Rent Expense 800 15 Prepaid Insurance 52 Equipment Rent Expense 675 17 Office Equipment 53 Utilities Expense 300 21 Accounts Payable 250 54 Music Expense 1,590 23 Unearned Revenue 55 Advertising Expense 500 31 Common Stock 4,000 56 Supplies Expense 180 33 Dividends 500 59 Miscellaneous Expense 415 Instructions 1. Enter the July 1, 2018, 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, 2018.
    Kelly Pitney began her consulting business, Kelly Consulting, on April 1, 2018. 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 1-16, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Recorded services provided on account for the period May 16-20,4,820. 25. Recorded cash from cash clients for fees earned for the period May 17- 23, 7,900. 27. Received cash from clients on account, 9,520. 28. Paid part-time receptionist for two weeks salary, 750. 30. Paid telephone bill for May, 260. 31. Paid electricity bill for May, 810. 31. Recorded cash from cash clients for fees earned for the period May 26-31, 3,300. 31. Recorded services provided on account for the remainder of May, 2,650. 31. Paid dividends, 10,500. Instructions 1. The cl1art of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2018, 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, 2018, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (A) Insurance expired during May is 275. (B) Supplies on hand on May 31 are 715. (C) Depreciation of office equipment for May is 330. (D) Accrued receptionist salary on May 31 is 325. (E) Rent expired during May is 1,600. (F) Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of d1e journal. (Income Summary is account #34 in d1e 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.
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