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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

MASTERY PROBLEM

Barry Bird opened the Barry Bird Basketball Camp for children ages 10 through 18. Campers typically register for one week in June or July, arriving on Sunday and returning home the following Saturday. College players serve as cabin counselors and assist the local college and high school coaches who run the practice sessions. The registration fee includes a room, meals at a nearby restaurant, and basketball instruction. In the off-season, the facilities are used for weekend retreats and coaching clinics. Bird developed the following chart of accounts for his service business:

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The following transactions took place during the month of June:

June 1 Bird invested cash in the business, $10,000.

1 Purchased basketballs and other athletic equipment, $3,000.

2 Paid Hite Advertising for flyers that had been mailed to prospective campers, $5,000.

2 Collected registration fees, $15,000.

2 Rogers Construction completed work on a new basketball court that cost $12,000. Arrangements were made to pay the bill in July.

5 Purchased office supplies on account from Gordon Office Supplies, $300.

6 Received bill from Magic’s Restaurant for meals served to campers on account, $5,800.

7 Collected registration fees, $16,200.

10 Paid wages to camp counselors, $500.

14 Collected registration fees, $13,500.

14 Received bill from Magic’s Restaurant for meals served to campers on account, $6,200.

17 Paid wages to camp counselors, $500.

18 Paid postage, $85.

21 Collected registration fees, $15,200.

22 Received bill from Magic’s Restaurant for meals served to campers on account, $6,500.

24 Paid wages to camp counselors, $500.

28 Collected registration fees, $14,000.

30 Received bill from Magic’s Restaurant for meals served to campers on account, $7,200.

30 Paid wages to camp counselors, $500.

30 Paid Magic’s Restaurant on account, $25,700.

30 Paid utility bill, $500.

30 Paid phone bill, $120.

30 Bird withdrew cash for personal use, $2,000.

REQUIRED

1. Enter the transactions in a general journal. Use the following journal pages: June 1–6, page 1; June 7–22, page 2; June 24–30, page 3.

2. Post the entries to the general ledger.

3. Prepare a trial balance.

1.

To determine

Prepare journal entry to record the given transaction.

Explanation

Journal:

Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Ø  Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Ø  Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

Prepare journal entry to record the given transactions.

DateAccounts title and explanation

Post.

Ref.

Debit

($)

Credit

($)

June 1Cash10110,000 
      Person B’s capital 311 10,000
 (To record owner’s original investment)   
     
June 1Athletic equipment1833,000 
      Cash101 3,000
 (To record the purchase of athletic equipment)   
     
June 2Advertising expense5125,000 
      Cash101 5,000
 (To record the payment of advertising)   
     
June 2Cash10115,000 
      Registration fees401 15,000
 (To record the collection of  registration fees)   
     
June 2Basketball facilities18412,000 
      Accounts payable202 12,000
 (To  record completion of construction of basketball court)   
     
June 5Office  supplies142300 
      Accounts payable202 300
 (To record purchase of office supplies on account from Gordon  office supplies)   
     
June 6Food expense5245,800 
      Accounts payable 202 5,800
 (To record the charge of camper’s meal at Restaurant M.)   
     
June 7Cash10116,200 
      Registration fees401 16,200
 (To record the collection of registration fees)   
     
June 10Wages Expense511500 
      Cash101 500
 (To record the payment of  wages to camp counselors)   
     
June 14Cash 10113,500 
      Registration fees 401 13,500
 (To record the cash collected on registration fees)   
     
June 14Food Expense5246,200 
      Accounts payable202 6,200
 (To record the charge of camper’s meal at Restaurant M...

2.

To determine

Post the entries to the general ledger

3.

To determine

Prepare trial balance.

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