Concept explainers
1.
Financial statement analysis:
The company and its users use financial analysis as a way to analyze the company’s financial statements to make investment and business decisions. There are four financial statements that any company should produce for its users for analysis. These are the income statement, balance sheet, cash flow statement and
To prepare: T accounts according to the balance method.
1.
Explanation of Solution
The T-accounts are prepared as follows:
Cash | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Account receivables | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Office Supplies | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Prepaid insurance | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Buildings | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Accumulated | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Salaries payable | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Common stock | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Dividends | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Storage fees earned | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Depreciation expense - buildings | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Salaries expense | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Insurance expense | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Rent expense | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Office supplies expense | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Repair expense | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Telephone expense | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
Income summary | ||||
Date | Explanation | Debit ($) | Credit ($) | Balance ($) |
2.
Financial statement analysis:
The company and its users use financial analysis as a way to analyze the company’s financial statements to make investment and business decisions. There are four financial statements that any company should produce for its users for analysis. These are the income statement, balance sheet, cash flow statement and stockholders’ equity statement.
To prepare: The
2.
Explanation of Solution
The journal entries are prepared as follows:
Date | Particulars | Debit ($) | Credit ($) |
1-Jul | Cash | 30,000 | |
Building | 150,000 | ||
Capital | 180,000 | ||
(To record cash and building invested into the business) | |||
2-Jul | Rent expense | 2,000 | |
Cash | 2,000 | ||
(To record rent expense paid.) | |||
5-Jul | Office Supplies | 2,400 | |
Cash | 2,400 | ||
(To record purchase of office supplies) | |||
10-Jul | Prepaid Insurance | 7,200 | |
Cash | 7,200 | ||
(To record one-year insurance premium paid) | |||
14-Jul | Salary expense | 1,000 | |
Cash | 1,000 | ||
(To record Salaries expense paid) | |||
24-Jul | Cash | 9,800 | |
Storage fees earned | 9,800 | ||
(To record cash received for service provided) | |||
28-Jul | Salary expense | 1,000 | |
Cash | 1,000 | ||
(To record salaries expense paid) | |||
29-Jul | Repair expense | 950 | |
Cash | 950 | ||
(To record repair expense paid) | |||
30-Jul | Telephone expenses | 400 | |
Cash | 400 | ||
(To record Telephone expense paid) | |||
31-Jul | dividend | 2,000 | |
Cash | 2,000 | ||
(To record dividend paid) |
Ledger accounts:
Cash Account No:101 | ||||
Date | Explanation | Debit | Credit | Balance |
1-Jul | $30,000 | $30,000 | ||
2-Jul | $2,000 | $28,000 | ||
5-Jul | $2,400 | $25,600 | ||
10-Jul | $7,200 | $18,400 | ||
14-Jul | $1,000 | $17,400 | ||
24-Jul | $9,800 | $27,200 | ||
28-Jul | $1,000 | $26,200 | ||
29-Jul | $950 | $25,250 | ||
30-Jul | $400 | $24,850 | ||
31-Jul | $2,000 | $22,850 |
After entering all the entries, the balance of the cash account as of 31 July is computed as $22,850.
b) Office supplies
Office Supplies Account No: 124 | ||||
Date | Explanation | Debit | Credit | Balance |
5-Jul | $2,400 | $2,400 |
After entering all the entries, the balance of the office supplies accounts as of 31 July is computed as $2,400.
c) Prepaid Insurance
Prepaid Insurance Account No: 128 | ||||
Date | Debit | Credit | Balance | |
10-Jul | $7,200 | $7,200 |
After entering all the entries, the balance of the prepaid insurance account as of 31 July is computed as $7,200.
D
Building Account No: 173 | ||||
Date | Debit | Credit | Balance | |
1-Jul | $150,000 | $150,000 |
After entering all the entries, the balance of the building account as of 31 July is computed as $150,000.
E
Common stock Account No: 301 | ||||
Date | Debit | Credit | Balance | |
1-Jul | $180,000 | $180,000 |
After entering all the entries, the balance of the common stock account as of 31 July is computed as $180,000.
F
Dividends
Dividends Account No: 319 | ||||
Date | Debit | Credit | Balance | |
31-Jul | $2,000 | $2,000 |
After entering all the entries, the balance of the dividend account as of 31 July is computed as $2,000.
G
Storage fees earned
Storage fees earned Account No: 40 | ||||
Date | Debit | Credit | Balance | |
24-Jul | $9,800 | $9,800 |
After entering all the entries, the balance of the storage fees earned account as of 31 July is computed as $9,800.
H
Salaries Expense
Salaries expense Account No: 622 | ||||
Date | Debit | Credit | Balance | |
14-Jul | $1,000 | $1,000 | ||
28-Jul | $1,000 | $2,000 |
After entering all the entries, the balance of salaries accounts as of 31 July is computed as $2,000.
I
Rent Expense
Rent Expense Account No: 640 | ||||
Date | Debit | Credit | Balance | |
2-Jul | $2,000 | $2,000 |
After entering all the entries, the balance of the rent expense account as of 31 July is computed as $2,000.
J
Repair Expense
Repair Expense Account No: 684 | ||||
Date | Debit | Credit | Balance | |
29-Jul | $950 | $950 |
After entering all the entries, the balance of the repair expense account as of 31 July is computed as $950.
K
Telephone Expense
Telephone Expense Account No: 688 | ||||
Date | Debit | Credit | Balance | |
30-Jul | $400 | $400 |
After entering all the entries, the balance of the telephone expense account as of 31 July is computed as $400.
3.
Financial statement analysis:
The company and its users use financial analysis as a way to analyze the company’s financial statements to make investment and business decisions. There are four financial statements that any company should produce for its users for analysis. These are the income statement, balance sheet, cash flow statement and stockholders’ equity statement.
To prepare:The unadjusted
3.
Explanation of Solution
The unadjusted trial balance is prepared as follows:
Company S | ||||
Unadjusted trial balance | ||||
31-Jul | ||||
Particulars | Debit ($) | Credit($) | ||
Cash | 22,850 | |||
0 | ||||
Office supplies | 2,400 | |||
Prepaid Insurance | 7,200 | |||
Buildings | 150,000 | |||
Accumulated depreciation-Buildings | 0 | |||
Salaries payable | 0 | |||
Company S Capital | 180,000 | |||
Dividends | 2,000 | |||
Storage fees earned | 9,800 | |||
Depreciation expense-Buildings | 0 | |||
Salaries expense | 2,000 | |||
Insurance expense | 0 | |||
Rent expense | 2,000 | |||
Office supplies expense | 0 | |||
Rent expense | 950 | |||
Telephone expense | 400 | |||
Total | 189,800 | 189,800 |
Therefore, the total amount of unadjusted trail balance is $189,800.
4.
Financial statement analysis:
The company and its users use financial analysis as a way to analyze the company’s financial statements to make investment and business decisions. There are four financial statements that any company should produce for its users for analysis. These are the income statement, balance sheet, cash flow statement and stockholders’ equity statement.
To prepare: The journal entries and ledger accounts for
4.
Explanation of Solution
Date | Particulars | Debit ($) | Credit ($) |
31-Jul | Insurance expense | 400 | |
Prepaid insurance | 400 | ||
(To record expiration of prepaid insurance) | |||
31-Jul | Office supplies expense | 875 | |
Office Supplies | 875 | ||
(To record cost of supplies used) | |||
31-Jul | Depreciation expense | 1,500 | |
Accumulated depreciation | 1,500 | ||
(To record depreciation of computer equipment) | |||
31-Jul | Salaries expense | 100 | |
Salaries payable | 100 | ||
(To record accrued salaries but not paid) | |||
31-Jul | Accounts receivable | 1,150 | |
Storage fees earned | 1,150 | ||
(To record accrued commission but not received) |
The ledger accounts are prepared as follows:
Insurance expense Account No: 637 | ||||
Date | Explanation | Debit | Credit | Balance |
31-Jul | $400 | $400 |
Prepaid Insurance Account No: 128 | ||||
Date | Debit | Credit | Balance | |
10-Jul | $7,200 | $7,200 | ||
31-Jul | $400 | $6,800 |
Office supplies expense Account No: 650 | ||||
Date | Explanation | Debit | Credit | Balance |
31-Jul | $875 | $875 |
Office Supplies Account No: 124 | ||||
Date | Explanation | Debit | Credit | Balance |
5-Jul | $2,400 | $2,400 | ||
31-Jul | $875 | $1,525 |
Depreciation expense - buildings Account No: 506 | ||||
Date | Explanation | Debit | Credit | Balance |
31-Jul | $1,500 | $1,500 |
Accumulated depreciation - buildings Account No: 174 | ||||
Date | Explanation | Debit | Credit | Balance |
31-Jul | $1,500 | $1,500 |
Salaries expense Account No: 622 | ||||
Date | Debit | Credit | Balance | |
14-Jul | $1,000 | $1,000 | ||
28-Jul | $1,000 | $2,000 | ||
31-Jul | $100 | $2,100 |
Salary payable Account No: 209 | ||||
Date | Debit | Credit | Balance | |
31-Jul | $100 | $100 |
Account receivable Account No: 106 | ||||
Date | Debit | Credit | Balance | |
31-Jul | $1,150 | $1,150 |
Storage fees earned Account No: 401 | ||||
Date | Debit | Credit | Balance | |
24-Jul | $9,800 | $9,800 | ||
31-Jul | $1,150 | $10,950 |
5.
Financial statement analysis:
The company and its users use financial analysis as a way to analyze the company’s financial statements to make investment and business decisions. There are four financial statements that any company should produce for its users for analysis. These are the income statement, balance sheet, cash flow statement and stockholders’ equity statement.
To prepare: The adjusted trial balance, the income statement, statement of retained earnings and the balance sheet.
5.
Explanation of Solution
An adjusted trial balance is prepared as follows:
Company S | ||||
Adjusted trial balance | ||||
31-Jul | ||||
Particulars | Debit ($) | Credit($) | ||
Cash | 22,850 | |||
Accounts receivable | 1,150 | |||
Office supplies | 1,525 | |||
Prepaid Insurance | 6,800 | |||
Buildings | 150,000 | |||
Accumulated depreciation-Buildings | 1,500 | |||
Salaries payable | 100 | |||
Company S Capital | 180,000 | |||
Dividends | 2,000 | |||
Storage fees earned | 10,950 | |||
Depreciation expense-Buildings | 1,500 | |||
Salaries expense | 2,100 | |||
Insurance expense | 400 | |||
Rent expense | 2,000 | |||
Office supplies expense | 875 | |||
Rent expense | 950 | |||
Telephone expense | 400 | |||
Total | 192,550 | 192,550 |
Therefore, the total amount of the trial balance is $192,550.
The income statement is prepared as follows:
Company S | ||||
Income statement | ||||
For the year ended July 31 | ||||
Particulars | Amount($) | Amount($) | ||
Revenues: Storage fees earned | 10,950 | |||
Less: expenses | ||||
Depreciation expense-Buildings | 1,500 | |||
Salaries expense | 2,100 | |||
Insurance expense | 400 | |||
Rent expense | 2,000 | |||
Office supplies expense | 875 | |||
Repair expense | 950 | |||
Telephone expense | 400 | |||
Total expense | 8,225 | |||
Net Income | 2,725 |
Therefore, the net income is $2,725.
The statement of retained earnings is prepared as follow:
Company S Statement of retained earnings For the year ended July 31 | ||||
Particulars | Amount ($) | |||
Opening balance | 0 | |||
Add: net income | 2,725 | |||
Less: dividends | (2,000) | |||
Ending balance | 725 |
Company S | ||||
Balance Sheet | ||||
31-Jul | ||||
Assets | Amount($) | |||
Cash | 22,850 | |||
Accounts receivable | 1,150 | |||
Office supplies | 1,525 | |||
Prepaid insurance | 6,800 | |||
Buildings | 150,000 | |||
Accumulated depreciation - Buildings | -1,500 | 148,500 | ||
Total assets | 180,825 | |||
Liabilities | ||||
Salaries payable | 100 | |||
Equity | ||||
Company S capital | 180,000 | |||
Retained earnings | 725 | |||
Total Liabilities and Equity | 180,825 |
Therefore, the balance sheet total is $180,825.
6.
Financial statement analysis:
The company and its users use financial analysis as a way to analyze the company’s financial statements to make investment and business decisions. There are four financial statements that any company should produce for its users for analysis. These are the income statement, balance sheet, cash flow statement and stockholders’ equity statement.
To prepare: The closing journal entries. Also, prepare ledger accounts for them.
6.
Explanation of Solution
Closing entries for are prepared as follows:
Date | Particulars | Debit ($) | Credit ($) |
31-Jul | Storage fees earned | 10,950 | |
Income summary | 10,950 | ||
(To close revenue account) | |||
31-Jul | Income summary | 8,225 | |
Depreciation expense | 1,500 | ||
Salaries expense | 2,100 | ||
Office supplies expense | 875 | ||
Insurance expense | 400 | ||
Rent expense | 2,000 | ||
Telephone expense | 400 | ||
(To close expense account) | |||
31-Jul | Income summary | 2,725 | |
Retained earnings | 2,725 | ||
(To close income summary) | |||
31-Jul | Retained earnings | 2,000 | |
Dividends | 2,000 | ||
To close dividends account) |
The ledger accounts are prepared as follows:
Income summary Account No: 901 | ||||
Date | Debit | Credit | Balance | |
31-Jul | $10,950 | $10,950 | ||
31-Jul | $8,225 | $2,725 | ||
31-Jul | $2,725 | 0 |
Dividends Account No: 319 | ||||
Date | Debit | Credit | Balance | |
31-Jul | $2,000 | $2,000 | ||
31-Jul | $2,000 | 0 |
Retained earnings Account No: 318 | ||||
Date | Debit | Credit | Balance | |
31-Jul | $2,725 | $2,725 | ||
31-Jul | $2,000 | $725 |
7.
Financial statement analysis:
The company and its users use financial analysis as a way to analyze the company’s financial statements to make investment and business decisions. There are four financial statements that any company should produce for its users for analysis. These are the income statement, balance sheet, cash flow statement and stockholders’ equity statement.
To prepare: Post-closing trial-balance.
7.
Explanation of Solution
Post-closing trial balance is prepared as follows:
Company S | ||||
Post-closing trial balance | ||||
31-Jul | ||||
Particulars | Debit ($) | Credit($) | ||
Cash | 22,850 | |||
Accounts receivable | 1,150 | |||
Office supplies | 1,525 | |||
Prepaid Insurance | 6,800 | |||
Computer equipment | 150,000 | |||
Accumulated depreciation-Buildings | 1,500 | |||
Salaries payable | 100 | |||
Company S Capital | 180,000 | |||
Retained earnings | 725 | |||
Total | 182,325 | 182,325 |
Therefore, the post-closing trial balance amount is $182,325.
Want to see more full solutions like this?
Chapter 3 Solutions
FINANCIAL ACCT.FUNDAMENTALS <CUSTOM LL>
- EFFECTS OF TRANSACTIONS (BALANCE SHEET ACCOUNTS) Jon Wallace started a business. During the first month (March 20--), the following transactions occurred. Show the effect of each transaction on the accounting equation: Assets= Liabilities + Owners Equity. After each transaction, show the new account totals. (a) Invested cash in the business, 30,000. (b) Bought office equipment on account, 4,500. (c) Bought office equipment for cash, 1,600. (d) Paid cash on account to supplier in transaction (b), 2,000. EFFECTS OF TRANSACTIONS (REVENUE, EXPENSE, WITHDRAWALS) This exercise is an extension of Exercise 2-3B. Lets assume Jon Wallace completed the following additional transactions during March. Show the effect of each transaction on the basic elements of the expanded accounting equation: Assets = Liabilities + Owners Equity (Capital Drawing + Revenues Expenses). After transaction (k), report the totals for each element. Demonstrate that the accounting equation has remained in balance. (e) Performed services and received cash, 3,000. (f) Paid rent for March, 1,000. (g) Paid March phone bill, 68. (h) Jon Wallace withdrew cash for personal use, 800. (i) Performed services for clients on account, 900. (j) Paid wages to part-time employee, 500. (k) Received cash for services performed on account in transaction (i), 500.arrow_forwardIn March, T. Carter established Carter Delivery Service. The account headings are presented below. Transactions completed during the month of March follow. a. Carter deposited 25,000 in a bank account in the name of the business. b. Bought a used truck from Degroot Motors for 15,140, paying 5,140 in cash and placing the remainder on account. c. Bought equipment on account from Flemming Company, 3,450. d. Paid the rent for the month, 1,000, Ck. No. 3001 (Rent Expense). e. Sold services for cash for the first half of the month, 6,927 (Service Income). f. Bought supplies for cash, 301, Ck. No. 3002. g. Bought insurance for the truck for the year, 1,200, Ck. No. 3003. h. Received and paid the bill for utilities, 349, Ck. No. 3004 (Utilities Expense). i. Received a bill for gas and oil for the truck, 218 (Gas and Oil Expense). j. Sold services on account, 3,603 (Service Income). k. Sold services for cash for the remainder of the month, 4,612 (Service Income). l. Paid wages to the employees, 3,958, Ck. Nos. 30053007 (Wages Expense). m. Carter withdrew cash for personal use, 1,250, Ck. No. 3008. Required 1. In the equation, write the owners name above the terms Capital and Drawing. 2. Record the transactions and the balance after each transaction. Identify the account affected when the transaction involves revenues or expenses. 3. Write the account totals from the left side of the equals sign and add them. Write the account totals from the right side of the equals sign and add them. If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forwardThe 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.arrow_forward
- In March, T. Carter established Carter Delivery Service. The account headings are presented below. Transactions completed during the month of March follow. a. Carter deposited 25,000 in a bank account in the name of the business. b. Bought a used truck from Degroot Motors for 15,140, paying 5,140 in cash and placing the remainder on account. c. Bought equipment on account from Flemming Company, 3,450. d. Paid the rent for the month, 1,000, Ck. No. 3001. e. Sold services for cash for the first half of the month, 6,927. f. Bought supplies for cash, 301, Ck. No. 3002. g. Bought insurance for the truck for the year, 1,200, Ck. No. 3003. h. Received and paid the bill for utilities, 349, Ck. No. 3004. i. Received a bill for gas and oil for the truck, 218. j. Sold services on account, 3,603. k. Sold services for cash for the remainder of the month, 4,612. l. Paid wages to the employees, 3,958, Ck. Nos. 30053007. m. Carter withdrew cash for personal use, 1,250, Ck. No. 3008. Required 1. Record the transactions and the balance after each transaction 2. Total the left side of the accounting equation (left side of the equal sign), then total the right side of the accounting equation (right side of the equal sign). If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forwardANALYSIS OF TRANSACTIONS Charles Chadwick opened a business called Charlies Detective Service in January 20--. Set up T accounts for the following accounts: Cash; Accounts Receivable; Office Supplies; Computer Equipment; Office Furniture; Accounts Payable; Charles Chadwick, Capital; Charles Chadwick, Drawing; Professional Fees; Rent Expense; and Utilities Expense. The following transactions occurred during the first month of business. Record these transactions in T accounts. After all transactions are recorded, foot and balance the accounts if necessary. (a) Invested cash in the business, 30,000. (b) Bought office supplies for cash, 300. (c) Bought office furniture for cash, 5,000. (d) Purchased computer and printer on account, 8,000. (e) Received cash from clients for services, 3,000. (f) Paid cash on account for computer and printer purchased in transaction (d), 4,000. (g) Earned professional fees on account during the month, 9,000. (h) Paid cash for office rent for January, 1,500. (i) Paid utility bills for the month, 800. (j) Received cash from clients billed in transaction (g), 6,000. (k) Withdrew cash for personal use, 3,000. TRIAL BALANCE Based on the transactions recorded in Exercise 3-7A, prepare a trial balance for Charlies Detective Service as of January 31, 20--.arrow_forwardA business has the following transactions: A. The business is started by receiving cash from an investor in exchange for common stock $10,000. B. Rent of $1,250 is paid for the first month. C. Office supplies are purchased for $375. D. Services worth $3,450 are performed. Cash is received for half. E. Customers pay $1,250 for services to be performed next month. F. $6,000 is paid for a one year insurance policy. G. We receive 25% of the money owed by customers in D. H. A customer has placed an order for $475 of services to be done this coming week. How much total revenue does the company have?arrow_forward
- 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.arrow_forwardJournal entries and trial balance On August 1, 20Y7, 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 in exchange for common stock, 17,500. b. Purchased 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. Paid dividends, 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, Common Stock, Dividends, 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, 20Y7. 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 retained earnings for August.arrow_forwardANALYSIS OF TRANSACTIONS Charles Chadwick opened a business called Charlies Detective Service in January 20--. Set up T accounts for the following accounts: Cash; Accounts Receivable; Office Supplies; Computer Equipment; Office Furniture; Accounts Payable; Charles Chadwick, Capital; Charles Chadwick, Drawing; Professional Fees; Rent Expense; and Utilities Expense. The following transactions occurred during the first month of business. Record these transactions in T accounts. After all transactions are recorded, foot and balance the accounts if necessary. (a) Invested cash in the business, 30,000. (b) Bought office supplies for cash, 300. (c) Bought office furniture for cash, 5,000. (d) Purchased computer and printer on account, 8,000. (e) Received cash from clients for services, 3,000. (f) Paid cash on account for computer and printer purchased in transaction (d), 4,000. (g) Earned professional fees on account during the month, 9,000. (h) Paid cash for office rent for January, 1,500. (i) Paid utility bills for the month, 800. (j) Received cash from clients billed in transaction (g), 6,000. (k) Withdrew cash for personal use, 3,000.arrow_forward
- Effects of transactions on Accounting equation On Time Delivery Service had the following selected transactions during November: 1. Received cash from issuance of common stock, $75,000. 2. Paid rent for November, $5000. 3. Paid advertising expense, $3,000. 4. Received cash for providing delivery services, $34,500. 5. Borrowed $10,000 from Second National Bank to finance its operations. 6. Purchased a delivery van for cash, $25,000. 7. Paid interest on note from Second National Bank, $75. 8. Paid salaries and wages for November, $10,000. 9. Paid dividends, $2,000. Indicate the effect of each transaction on the accounting equation by listing the numbers identifying the transactions, (1) through (9), in a vertical column, and inserting at the right of each number the appropriate letter from he following list: a. Increase in an asset, decrease in another asset. h. Increase in an asset, increase in a liability. c. Increase in an asset, increase in stockholders’ equity. d. Decrease in an asset, decrease in a liability. e. Decrease in an asset, decrease in stockholders equity.arrow_forwardANALYSIS OF TRANSACTIONS Nicole Lawrence opened a business called Nickies Neat Ideas in January 20--. Set up T accounts for the following accounts: Cash; Accounts Receivable; Office Supplies; Computer Equipment; Office Furniture; Accounts Payable; Nicole Lawrence, Capital; Nicole Lawrence, Drawing; Professional Fees; Rent Expense; and Utilities Expense. The following transactions occurred during the first month of business. Record these transactions in T accounts. After all transactions have been recorded, foot and balance the accounts if necessary. (a) Invested cash in the business, 8,000. (b) Purchased office supplies for cash, 500. (c) Purchased office furniture for cash, 8,000. (d) Purchased computer and printer on account, 5,000. (e) Received cash from clients for services, 4,000. (f) Paid cash on account for computer and printer purchased in transaction (d), 2,000. (g) Earned professional fees on account during the month, 7,000. (h) Paid office rent for January, 900. (i) Paid utility bills for the month, 600. (j) Received cash from clients that were billed previously in transaction (g), 3,000. (k) Withdrew cash for personal use, 4,000. TRIAL BALANCE Based on the transactions recorded in Exercise 3-7B, prepare a trial balance for Nickies Neat Ideas as of January 31, 20--.arrow_forwardOn March 1 of this year, B. Gervais established Gervais Catering Service. The account headings are presented below. Transactions completed during the month follow. a. Gervais deposited 25,000 in a bank account in the name of the business. b. Bought a truck from Kelly Motors for 26,329, paying 8,000 in cash and placing the balance on account, Ck. No. 500. c. Bought catering equipment on account from Luigis Equipment, 3,795. d. Paid the rent for the month, 1,255, Ck. No. 501 (Rent Expense). e. Bought insurance for the truck for one year, 400, Ck. No. 502. f. Sold catering services for cash for the first half of the month, 3,012 (Catering Income). g. Bought supplies for cash, 185, Ck. No. 503. h. Sold catering services on account, 4,307 (Catering Income). i. Received and paid the heating bill, 248, Ck. No. 504 (Utilities Expense). j. Received a bill from GC Gas and Lube for gas and oil for the truck, 128 (Gas and Oil Expense). k. Sold catering services for cash for the remainder of the month, 2,649 (Catering Income). l. Gervais withdrew cash for personal use, 1,550, Ck. No. 505. m. Paid the salary of the assistant, 1,150, Ck. No. 506 (Salary Expense). Required 1. In the equation, write the owners name above the terms Capital and Drawing. 2. Record the transactions and the balance after each transaction. Identify the account affected when the transaction involves revenues or expenses. 3. Write the account totals from the left side of the equals sign and add them. Write the account totals from the right side of the equals sign and add them. If the two totals are not equal, check the addition and subtraction. If you still cannot find the error, re-analyze each transaction.arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
- College Accounting (Book Only): A Career ApproachAccountingISBN:9781305084087Author:Cathy J. ScottPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning