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COMPREHENSIVE PROBLEM 1: The Accounting Cycle Bob Night opened The General’s Favorite Fishing Hole. The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season. Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon. The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques. The chart of accounts for the camping operations is provided below. The General’s Favorite Fishing Hole Chart of Accounts Assets Revenues 101 Cash 401 Registration Fees 142 Office Supplies 14 Food Supplies Expenses 145 Prepaid Insurance 511 Wages Expense 181 Fishing Boats 521 Rent Expense 181.1 Accum. Depr.—Fishing Boats 523 Office Supplies Expense 524 Food Supplies Expense Liabilities 525 Phone Expense 202 Accounts Payable 533 Utilities Expense 219 Wages Payable 535 Insurance Expense 536 Postage Expense Owner’s Equity 542 Depr. Exp.—Fishing Boats 311 Bob Night, Capital 312 Bob Night, Drawing 313 Income Summary The following transactions took place during April 20--. Apr. 1 Night invested cash in business, $90,000. 1 Paid insurance premium for six-month camping season, $9,000. 2 Paid rent for lodge and campgrounds for the month of April, $40,000. 2 Deposited registration fees, $35,000. 2 Purchased 10 fishing boats on account for $60,000. The boats have estimated useful lives of five years, at which time they will be donated to a local day camp. Arrangements were made to pay for the boats in July. 3 Purchased food supplies from Acme Super Market on account, $7,000. 5 Purchased office supplies from Gordon Office Supplies on account, $500. 7 Deposited registration fees, $38,600. 10 Purchased food supplies from Acme Super Market on account, $8,200. 10 Paid wages to fishing guides, $10,000. 14 Deposited registration fees, $30,500. Apr. 16 Purchased food supplies from Acme Super Market on account, $9,000. 17 Paid wages to fishing guides, $10,000. 18 Paid postage, $150. 21 Deposited registration fees, $35,600. 24 Purchased food supplies from Acme Super Market on account, $8,500. 24 Paid wages to fishing guides, $10,000. 28 Deposited registration fees, $32,000. 29 Paid wages to fishing guides, $10,000. 30 Purchased food supplies from Acme Super Market on account, $6,000. 30 Paid Acme Super Market on account, $32,700. 30 Paid utilities bill, $2,000. 30 Paid phone bill, $1,200. 30 Bob Night withdrew cash for personal use, $6,000. Adjustment information for the end of April is provided below. (a) Office supplies remaining on hand, $100. (b) Food supplies remaining on hand, $8,000. (c) Insurance expired during the month of April, $1,500. (d) Depreciation on the fishing boats for the month of April, $1,000. (e) Wages earned, but not yet paid, at the end of April, $500. REQUIRED 1. Enter the transactions in a general journal. Enter transactions from April 1–5 on page 1, April 7–18 on page 2, April 21–29 and the first two entries for April 30 on page 3, and the remaining entries for April 30 on page 4. 2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general ledger accounts.) 3. Prepare a trial balance on a work sheet. 4. Complete the work sheet. 5. Journalize the adjusting entries (page 5). 6. Post the adjusting entries to the general ledger. 7. Prepare the income statement. 8. Prepare the statement of owner’s equity. 9. Prepare the balance sheet. 10. Journalize the closing entries (pages 5 and 6). 11. Post the closing entries to the general ledger. 12. Prepare a post-closing trial balance.

BuyFind

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756
BuyFind

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756

Solutions

Chapter
Section
Chapter 6A, Problem 1COP
Textbook Problem

COMPREHENSIVE PROBLEM 1:

The Accounting Cycle

Bob Night opened The General’s Favorite Fishing Hole. The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season. Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon. The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques. The chart of accounts for the camping operations is provided below.

The General’s Favorite Fishing Hole

Chart of Accounts

Assets Revenues
101 Cash 401 Registration Fees
142 Office Supplies    
14  Food Supplies Expenses
145 Prepaid Insurance 511 Wages Expense
181 Fishing Boats 521 Rent Expense
181.1 Accum. Depr.—Fishing Boats 523 Office Supplies Expense
    524 Food Supplies Expense
Liabilities 525 Phone Expense
202 Accounts Payable 533 Utilities Expense
219 Wages Payable 535 Insurance Expense
    536 Postage Expense
Owner’s Equity 542 Depr. Exp.—Fishing Boats
311 Bob Night, Capital    
312 Bob Night, Drawing    
313 Income Summary    

The following transactions took place during April 20--.

Apr. 1 Night invested cash in business, $90,000.
  1 Paid insurance premium for six-month camping season, $9,000.
  2 Paid rent for lodge and campgrounds for the month of April, $40,000.
  2 Deposited registration fees, $35,000.
  2 Purchased 10 fishing boats on account for $60,000. The boats have estimated useful lives of five years, at which time they will be donated to a local day camp. Arrangements were made to pay for the boats in July.
  3 Purchased food supplies from Acme Super Market on account, $7,000.
  5 Purchased office supplies from Gordon Office Supplies on account, $500.
  7 Deposited registration fees, $38,600.
  10 Purchased food supplies from Acme Super Market on account, $8,200.
  10 Paid wages to fishing guides, $10,000.
  14 Deposited registration fees, $30,500.
Apr. 16 Purchased food supplies from Acme Super Market on account, $9,000.
  17 Paid wages to fishing guides, $10,000.
  18 Paid postage, $150.
  21 Deposited registration fees, $35,600.
  24 Purchased food supplies from Acme Super Market on account, $8,500.
  24 Paid wages to fishing guides, $10,000.
  28 Deposited registration fees, $32,000.
  29 Paid wages to fishing guides, $10,000.
  30 Purchased food supplies from Acme Super Market on account, $6,000.
  30 Paid Acme Super Market on account, $32,700.
  30 Paid utilities bill, $2,000.
  30 Paid phone bill, $1,200.
  30 Bob Night withdrew cash for personal use, $6,000.
  Adjustment information for the end of April is provided below.
  (a) Office supplies remaining on hand, $100.
  (b) Food supplies remaining on hand, $8,000.
  (c) Insurance expired during the month of April, $1,500.
  (d) Depreciation on the fishing boats for the month of April, $1,000.
  (e) Wages earned, but not yet paid, at the end of April, $500.

REQUIRED

  1. 1. Enter the transactions in a general journal. Enter transactions from April 1–5 on page 1, April 7–18 on page 2, April 21–29 and the first two entries for April 30 on page 3, and the remaining entries for April 30 on page 4.
  2. 2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general ledger accounts.)
  3. 3. Prepare a trial balance on a work sheet.
  4. 4. Complete the work sheet.
  5. 5. Journalize the adjusting entries (page 5).
  6. 6. Post the adjusting entries to the general ledger.
  7. 7. Prepare the income statement.
  8. 8. Prepare the statement of owner’s equity.
  9. 9. Prepare the balance sheet.
  10. 10. Journalize the closing entries (pages 5 and 6).
  11. 11. Post the closing entries to the general ledger.
  12. 12. Prepare a post-closing trial balance.

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