FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS
FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS
1st Edition
ISBN: 9781618531612
Author: Wallace, Nelson, Christensen, Ferris
Publisher: Cambridge
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Chapter 3, Problem 2AP

a & b

To determine

Prepare the necessary journal entries and post to the ledger accounts.

a & b

Expert Solution
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Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Prepare the journal entries in the books of W Catering Service.

DateAccount titles and ExplanationDebit ($)Credit ($)
July 1Cash (A+)18,000 
Common stock (E+) 18,000
(To record the issuance of common stock)  
   
July 2Delivery van (A+)3,780 
 Equipment (A+)3,240 
 Supplies (A+)1,700 
Cash(A-) 8,720
(To record  the purchase of asset)  
   
July 3Prepaid insurance (A+)2,160 
Cash (A-) 2,160
(To record the payment of insurance premium)  
   
July 4Cash (A+)6,000 
Unearned catering fees revenue (L+) ($750×8) 6,000
(To record the receipt of cash in advance for unearned catering  fees revenue)  
   
July 5Prepaid rent (A+)2,340 
Cash (A-) 2,340
(To record the prepaid rent)  
   
July 6Wages expense (E-)1,700 
Cash (A-) 1,700
(To record the wages expense)  
   
July 7Accounts receivable (A+)5,000 
Catering fees revenue (E+) 5,000
(To record the revenue on account)  
   
July 8Supplies (A+)3,400 
Accounts payable ((L+) 3,400
(To record the purchase of supplies on account)  
   
July 9Wages expense(E+)1,800 
Cash (A-) 1,800
(To record the payment of wages)  
   
July 10Delivery van expense(E+)850 
Cash (A-) 850
(To record the payment of delivery van expense)  
   
July 11Cash (A+)3,700 
Accounts receivable (A-) 3,700
(To record the collection of cash from customers)  
   
July 12Accounts receivable (A+)4,800 
 Catering Fees Revenue (E+) 4,800
 (To record the revenues on account)  
    
July 13Dividends (E-)2,000 
 Cash(A-) 2,000
 (To record the payment of cash dividends)  

Table (1)

T-account:

T-account is the form of the ledger account, where the journal entries are posted to this account. It is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.

The components of the T-account are as follows:

a) The title of the account

b) The left or debit side

c) The right or credit side

Prepare the T-accounts:

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS, Chapter 3, Problem 2AP , additional homework tip  1

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS, Chapter 3, Problem 2AP , additional homework tip  2

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS, Chapter 3, Problem 2AP , additional homework tip  3

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS, Chapter 3, Problem 2AP , additional homework tip  4

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS, Chapter 3, Problem 2AP , additional homework tip  5

c.

To determine

Prepare an unadjusted trial balance as of 31st July.

c.

Expert Solution
Check Mark

Explanation of Solution

Unadjusted trial balance:

Unadjusted trial balance is that statement which contains complete list of accounts with their unadjusted balances. This statement is prepared at the end of every financial period.

Prepare the unadjusted trial balance as of 31st July.

W Catering Services
Unadjusted Trial Balance
For the year ended 31st July
AccountsDebit ($)Credit ($)
Cash8,130 
Supplies5,100 
Accounts receivable6,100 
Prepaid insurance2,160 
Prepaid rent2,340 
Equipment3,240 
Delivery Van3,780 
Accounts Payable 3,400
Common Stock 18,000
Dividends2,000 
Catering Fees Revenue 9,800
Unearned Catering Fees Revenue 6,000
Wages Expense3,500 
Delivery Van Expenses850 
Total37,20037,200

Table (2)

Conclusion

The debit column and credit column of the unadjusted trial balance are agreed, both having balance of $37,200.

d.

To determine

Prepare the adjusting entries and post to the ledger accounts.

d.

Expert Solution
Check Mark

Explanation of Solution

Adjusting entries: Adjusting entries are the journal entries which are recorded at the end of the accounting period to correct or adjust the revenue and expense accounts, to concede with the accrual principle of accounting.

Prepare the adjusting entries in the books of W Catering Service.

DateAccount titles and ExplanationDebit ($)Credit ($)
July 31Office Supplies Expense (E+) (1)3,500
Office Supplies (A–)3,500
(To record the adjusting entry for office supplies expense)
   
July 31Wages Expense (E+)525
 Wages Payable (L+) 525
 (To record the adjusting entry for wages expense  
   
July 31Depreciation Expense- Equipment (E+) (2)45
Accumulated Depreciation -  Equipment (A–)45
(To record the amount of depreciation for July)
   
July 31Depreciation Expense- Delivery van (E+) (3)105
Accumulated Depreciation -  Delivery van (A–)105
(To record the amount of depreciation for July)
   
July 31Rent Expense (E+) (4)780
Prepaid Rent(A–)780
(To record the adjusting entry for rent expense)
   
July 31Insurance Expense (E+) (5)180
Prepaid Insurance(A–)180
(To record the adjusting entry for insurance expense)
   
July 31Unearned Catering Fees (L–)750
Catering Fees Revenue (E+)750
(To record the adjusting entry for unearned catering fees)

Table (3)

Working note:

Calculate the amount of office supplies used during the year:

OfficeSupplies used=BalanceinthetrialbalanceBalanceinhand=$5,100$1,600=$3,500 (1)

Calculate the amount of depreciation on equipment for the month July:

Depreciation Expense = Cost of the AssetUseful Life of the Asset ×112=$3,2406×112=$45 (2)

Calculate the amount of depreciation on delivery van for the month July:

Depreciation Expense = Cost of the AssetUseful Life of the Asset ×112=$3,7803×112=$105 (3)

Calculate the rent expense for the month of July:

Prepaid Rent For 3 Months = $2,340Prepaid Rent for 1 Month = $2,3403=$780 (4)

Calculate the insurance expense for the month of July:

Prepaid Insurance For 12 Months = $2,160Prepaid Rent for 1 Month = $2,16012=$180 (5)

T-account:

T-account is the form of the ledger account, where the journal entries are posted to this account. It is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.

The components of the T-account are as follows:

a) The title of the account

b) The left or debit side

c) The right or credit side

Prepare the T-accounts:

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS, Chapter 3, Problem 2AP , additional homework tip  6

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS, Chapter 3, Problem 2AP , additional homework tip  7

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Chapter 3 Solutions

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS

Ch. 3 - Prob. 4QCh. 3 - Prob. 5QCh. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10QCh. 3 - Prob. 11QCh. 3 - Prob. 12QCh. 3 - Prob. 1SECh. 3 - Prob. 2SECh. 3 - Prob. 3SECh. 3 - Prob. 4SECh. 3 - Prob. 5SECh. 3 - Prob. 6SECh. 3 - Prob. 7SECh. 3 - Prob. 8SECh. 3 - Prob. 9SECh. 3 - Prob. 10SECh. 3 - Prob. 11SECh. 3 - Prob. 12SECh. 3 - Prob. 1AECh. 3 - Prob. 2AECh. 3 - Prob. 3AECh. 3 - Prob. 4AECh. 3 - Prob. 5AECh. 3 - Prob. 6AECh. 3 - Prob. 7AECh. 3 - Prob. 8AECh. 3 - Prob. 9AECh. 3 - Prob. 10AECh. 3 - Prob. 11AECh. 3 - Prob. 12AECh. 3 - Prob. 13AECh. 3 - Prob. 14AECh. 3 - Prob. 15AECh. 3 - Prob. 16AECh. 3 - Prob. 1BECh. 3 - Prob. 2BECh. 3 - Prob. 3BECh. 3 - Prob. 4BECh. 3 - Prob. 5BECh. 3 - Prob. 6BECh. 3 - Prob. 7BECh. 3 - Prob. 8BECh. 3 - Prob. 9BECh. 3 - Prob. 10BECh. 3 - Prob. 11BECh. 3 - Prob. 12BECh. 3 - Prob. 13BECh. 3 - Prob. 14BECh. 3 - Prob. 15BECh. 3 - Prob. 16BECh. 3 - Prob. 1APCh. 3 - Prob. 2APCh. 3 - Prob. 3APCh. 3 - Prob. 4APCh. 3 - Prob. 5APCh. 3 - Prob. 6APCh. 3 - Prob. 7APCh. 3 - Prob. 8APCh. 3 - Prob. 9APCh. 3 - Prob. 10APCh. 3 - Prob. 11APCh. 3 - Prob. 12APCh. 3 - Prob. 13APCh. 3 - Prob. 14APCh. 3 - Prob. 15APCh. 3 - Prob. 16APCh. 3 - Prob. 17APCh. 3 - Prob. 18APCh. 3 - Prob. 19APCh. 3 - Prob. 20APCh. 3 - Prob. 1BPCh. 3 - Prob. 2BPCh. 3 - Prob. 3BPCh. 3 - Prob. 4BPCh. 3 - Prob. 5BPCh. 3 - Prob. 6BPCh. 3 - Prob. 7BPCh. 3 - Prob. 8BPCh. 3 - Prob. 9BPCh. 3 - Prob. 10BPCh. 3 - Prob. 11BPCh. 3 - Prob. 12BPCh. 3 - Prob. 13BPCh. 3 - Prob. 14BPCh. 3 - Prob. 15BPCh. 3 - Prob. 16BPCh. 3 - Prob. 17BPCh. 3 - Prob. 18BPCh. 3 - Prob. 19BPCh. 3 - Prob. 20BPCh. 3 - Prob. 1EYKCh. 3 - Prob. 2EYKCh. 3 - Prob. 3EYKCh. 3 - Prob. 4EYKCh. 3 - Prob. 6EYKCh. 3 - Prob. 7EYKCh. 3 - Prob. 8EYKCh. 3 - Prob. 9EYKCh. 3 - Prob. 10EYKCh. 3 - Prob. 11EYK
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