chapters from 1 - 3.doc
- 1. P1-1B Solki’s Repair Shop was started on May 1 by Solki Lee.A summary of May transactions is presented below. 1. Invested $10,000cash to start the repair shop. 2. Purchased equipment for $5,000 cash. 3. Paid $400 cash for May office rent. 4. Paid $500 cash for supplies. 5. Incurred $250 of advertising costs in the Beacon News onaccount. 6. Received $6,100in cash from customers forrepair service. 7. Withdrew $1,000 cash for personal use. 8. Paid part-time employee salaries $2,000. 9. Paid utility bills $170. 10. Performed repairservices worth $750 on account. 11. Collected cash of $120 forservices billed in transaction (10). Instructions (a) Prepare a tabular analysis of the transactions, P1-2B Peter Nimmer opened a veterinary business in Nashville, Tennessee,on August 1, 2017.On August 31, the balance sheet showed Cash $9,000, Accounts Receivable $1,700, Supplies $600,Equipment$6,000,Accounts Payable $3,600,and Owner’s Capital $13,700. During September,the following transactions occurred. 1. Paid $2,900 cash on accounts payable. 2. Collected $1,300of accounts receivable. 3. Purchased additional equipment for $2,100,paying $800 in cash and the balance on account. 4. Recognized revenue of $7,800,of which $2,500 is received in cash and the balance is due in October. 5. Withdrew $1,100 cash for personal use. 6. Paid salaries $1,700,rent for September$900,and advertising expense $450. 7. Incurred utilities expense for month on account $170. 8. Received $10,000 from Capital Bank (money borrowed on a note payable). Instructions (a) Prepare a tabular analysis of the Septembertransactions P1-3C On June 1, Laurie Shaw started Fancy CosmeticsCo., a company that provides individual skin care treatment, by investing $26,200 cashin the business.Following are the assets and liabilities of the company at June 30 and the revenues and expenses forthe month of June. Cash Accounts Receivable $11,000 4,000 Notes Payable Accounts Payable $13,000 1,200 Service Revenue 6,000 Supplies Expense 1,600 Supplies 2,000 Gasoline Expense 800 Advertising Expense 500 Utilities Expense 300 Equipment 25,000 Laurie Shaw made no additional investment in June, but withdrew $1,200 in cash for personaluse during the month. Instructions (a) Prepare an income statement and owner’s equity statement for the month of June and a balance sheet at June 30, 2017 E2-2B Selected transactions for B. Dawes, an interior decorator, in her first month of business,are as follows. Jan. 2 Invested $20,000 cashin business. 3 Paid $500 cash foradvertising.
- 2. 9 Purchased equipmentfor $7,000 cash. 11 Billed customers $2,300forservices performed. 16 Purchased supplies on account for $700. 20 Received $1,100cash from customers billed on January 11. 23 Paid creditor$400 cash on balance owed. 28 Withdrew $1,200 cash for personal use by owner. Instructions Journalize the transactions. E2-4B Presented belowis information related to WestLake Real Estate Agency. Oct. 1 Paul Ebu begins business as a real estate agent with a cash investment of $22,000. 2 Paid rent, $700,on officespace. 3 Purchases office furniture for $2,800,on account. 6 Sells a house and lot for Jane Hung; bills Jane Hung $5,400 forrealty services provided. 27 Pays $1,100 on the balance related to the transaction of October3. 30 Receives bill for Octoberutilities, $180 (not paid at this time). Instructions Journalize the transactions. E2-6B Bluma Industries had the following transactions. 1. Borrowed $15,000 from the bank by signing a note. 2. Paid $3,100 cash for a computer. 3. Paid $900 for rent. Instructions Journalize the transactions. E2-7B Shirley Enterprises had the following selected transactions. 1. Shirley Estrada invested $6,000 cash in the business. 2. Purchased $1,100 of supplies on account. 3. Performedconsulting services and billed a client $4,500. 4. Shirley Estrada withdrew $1,200 cash for personal use. Instructions Journalize the transactions. E2-12B Selectedtransactions for Reyes Company during its first month in business are presented below. Sept. 1 5 Invested $25,000cash in the business. Purchased equipment for $30,000 paying $7,500 in cash and the balance on account. 25 Paid $6,500 cashon balance owed for equipment. 30 Withdrew $1,000 cash for personal use. Instructions (a) Journalize the transactions on page J1 of the journal. (Omit explanations). (b) Post the transactions using the standard account form P2-1B Frontier Park was started on April 1 by M. Preston. The following selected events and transactions occurred during April. Apr. 1 Preston invested $35,000 cash in the business. 4 Purchased land costing $27,000 forcash. 8 Incurred advertising expense of $1,800 on account. 11 Paid salaries to employees$1,500. 12 Hired park manager at a salary of $4,000 per month, effective May 1. 13 Paid $1,650 cashfor a one-year insurance policy. 17 Withdrew $1,000 cash for personal use. 20 Received $6,800in cash for admissionfees. 25 Sold 100 couponbooks for $25 each. Each book contains 10 coupons that
- 3. entitle the holder to one admission to the park. 30 Received $8,900in cash admissionfees. 30 Paid $900 on balance owed for advertising incurred on April 8. Instructions Journalize the April transactions. P2-2B Iris Beck is a licensed CPA. During the first month of operations of her business, the following events and transactions occurred. May 1 Beck invested $20,000cash in her business. 2 Hired a secretary-receptionistat a salary of $2,000 permonth. 3 Purchased $2,500 of supplies on account from Tinio Supply Company. 7 Paid office rent of $900 cash for the month. 11 Completeda tax assignment and billed client $3,200 forservices performed. 12 Received $3,500advance on a management consulting engagement. 17 Received cash of $1,200 for services performed forMisra Co. 31 Paid secretary-receptionist$2,000 salary for the month. 31 Paid 60% of balance due Tinio Supply Company. Instructions (a) Journalize the transactions. (b) Post to the ledger accounts. (c) Prepare a trial balance on May 31, 2017. P2-1C Eucpar Miniature Golf and Driving Range was opened on March 1 by Nicholas Palmer. The following selectedevents and transactions occurred during March: Mar. 1 3 Invested $50,000cash in the business. Purchased Tee’s Golf Land for$38,000 cash. The price consists of land $23,000, building $9,000,and equipment $6,000. 5 Advertised the opening of the driving range and miniature golf course,paying advertising expenses of$1,600. 6 Paid cash $1,480 fora one-year insurance policy. 10 Purchased golf clubs and other equipmentfor $2,600 from Hogan Company payable in 30 days. 18 Received $800 in cash for golf fees (record as service revenue). 19 Sold 100 couponbooks for $15 each. Each book contains 10 coupons that enable the holder to play one round of miniature golf or to hit one bucket of golf balls. 25 Withdrew $2,000 cash for personal use. 30 Paid salaries of $600. 30 Paid Hogan Company in full. 31 Received $500 cashfor golf fees. Instructions Journalize the March transactions P2-2C Barbara Fair is a licensed architect. During the first month of the operation of her business,the following events and transactions occurred. April 1 Invested $45,000 cash. 1 Hired a secretary-receptionistat a salary of $500 per week payable monthly. 2 Paid office rent for the month $800. 3 Purchased architectural supplies on account from Dakin Company $1,500. 10 Completedblueprints on a carport and billed client $1,800 for services performed. 11 Received $500 cashadvance from D. Ellington for the designof a new home. 20 Received $1,500cash for services completed and delivered to J. Leno.
- 4. 30 Paid secretary-receptionistforthe month $2,000. 30 Paid $600 to Dakin Company for accounts payable due. Instructions (a) Journalize the transactions. (b) Post to the ledger accounts. (c) Prepare a trial balance on April 30, 2017. P2-3C Haskett Services was formed on May 1, 2017.The following transactions took place during the first month. Transactions on May 1: 1. Frank Haskett invested $100,000 cash in the company, as its sole owner. 2. Hired two employees to work in the warehouse. They will each be paid a salary of $3,000 permonth. 3. Signed a 2-year rental agreementon a warehouse; paid $36,000 cashin advance for the first year. 4. Purchased furniture and equipment costing $60,000.A cash payment of $20,000 was made immediately; the remainder will be paid in 6 months. 5. Paid $3,000 cash for a one-year insurance policy on the furniture and equipment. 6. Purchased basic office supplies for$1,000 cash. 7. Purchased more office supplies for$3,000 on account. 8. Total revenues earned were $30,000—$10,000cash and $20,000 on account. 9. Paid $800 to suppliers for accounts payable due. 10. Received $5,000 from customersin payment of accounts receivable. 11. Received utility bills in the amount of $400,to be paid next month. 12. Paid the monthly salaries of the two employees,totalling $6,000. Instructions (a) Prepare journal entries to record each of the events listed. (b) Post the journal entries to T accounts. (c) Prepare a trial balance as of May 31, 2017. E3-2B Burris Industries collected$140,000 from customersin 2017.Of the amount collected,$30,000was for services performed in2013.In addition, Burris performedservices worth $47,000in 2017,which will not be collected until 2018. Burris Industries also paid $110,000 forexpenses in2014.Of the amount paid, $30,000 was for expenses incurred on account in 2016.In addition, Burris incurred $44,000 of expenses in 2017,which will not be paid until 2018. Instructions (a) Compute 2014 cash-basis net income. (b) Compute 2014 accrual-basis net income. E3-4B Shellhammer Company has the following balances in selected accounts on December31,2017. Accounts Receivable Accumulated Depreciation—Equipment Equipment $ -0- -0- 7,000 InterestPayable -0- Notes Payable 25,000 Prepaid Insurance Salaries and Wages Payable Supplies 2,520 -0- 2,650 Unearned Service Revenue 50,000 All the accounts have normal balances. The information below has been gathered at December31,2017.
- 5. 1. Shellhammer Company borrowed $30,000 by signing a 12%,one-year note on October1, 2017. 2. A count of supplies on December31,2017,indicates that supplies of $700 are on hand. 3. Depreciationon the equipmentfor 2017 is $2,000. 4. Shellhammer Company paid $2,520 for12 months of insurance coverage on August 1, 2017. 5. On December1, 2017,Shellhammer collected $50,000 forconsulting services to be performed from December1, 2017,through March 31, 2018. 6. Shellhammer performedconsulting services fora client in December 2017. The client will be billed $5,300. 7. Shellhammer Company pays its employeestotal salaries of $12,000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December30,employees were paid for the week ending December27. All employees worked the last 2 days of 2017. Instructions Prepare adjusting entries for the seven items described above. E3-6B The ledgerof Hager Rental Agencyon March 31 of the current year includes the following selectedaccounts before adjusting entries have been prepared. Prepaid Insurance Supplies $ 4,200 3,400 Equipment 30,000 Accumulated Depreciation—Equipment Notes Payable $10,500 25,000 Unearned Rent Revenue 10,800 Rent Revenue 60,000 InterestExpense Salaries and Wages Expense –0– 14,000 An analysis of the accounts shows the following. 1. The equipment depreciates$300 permonth. 2. The unearned rent revenue represents $10,800collectedon January 1 for the period January 1 through March 31. 3. Interestof $750 is accrued on the notes payable. 4. Supplies on hand total $1,300. 5. The company paid $4,200 on January 1 for a 2-year insurance policy. Instructions Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. E3-7B Diane Baden, D.D.S., opened a dental practice on January 1, 2017. During the first month of operations the following transactions occurred. 1. Performedservices forpatients who had dental plan insurance. At January 31, $1,280 of such services were performed butnot yet recorded. 2. Utility expenses incurred but not paid prior to January 31 totaled $365 3. Purchased dental equipment on January 1 for $80,000,paying $20,000 in cash and signing a $60,000,3-year note payable. The equipmentdepreciates $500 per month. Interest is $600 per month. 4. Purchased a one-year malpractice insurance policyon January 1 for $9,600. 5. Purchased $2,300 of dental supplies.On January 31, determined that $700 of supplies were on hand. Instructions Prepare the adjusting entries on January 31.
- 6. E3-15B SappingtonCompany has the following balances in selected accounts on December31,2017. Service Revenue Insurance Expense $65,000 3,600 Supplies Expense 4,100 1-SappingtonCompany paid $3,600 for12 months of insurance coverage on August 1, 2017. 2. On December1, 2017,Sappington Company collected $65,000forconsulting services to be performed from December1, 2017,through April 30, 2018. 3. A count of supplies on December31,2017,indicates that supplies of $1,200 are on hand. Instructions Prepare the adjusting entries needed at December31, 2017. P3-1B Jason Elsner started his own consulting firm, Elsner Company, on June 1, 2017. The trial balance at June 30 is shown below. ELSNER COMPANY Trial Balance June 30, 2017 AccountNumber Debit Credit 101 Cash $ 7,150 112 Accounts Receivable 6,000 126 Supplies 2,000 130 Prepaid Insurance 3,000 157 Equipment 15,000 201 Accounts Payable $ 4,500 209 Unearned Service Revenue 4,000 301 Owner’s Capital 21,750 400 Service Revenue 7,900 726 Salaries and Wages Expense 4,000 729 Rent Expense 1,000 Other data: 1. Supplies on hand at June 30 are $750. 2. A utility bill for $150 has not been recorded and will not be paid until next month. 3. The insurance policy is for a year. 4. $2,800 of unearned service revenue is recognized forservices performed during the month. 5. Salaries of $1,900 are accrued at June 30. 6. The equipment has a 5-year life with no salvage value. It is being depreciated at $250 per month for 60 months. 7. Invoices representing $1,200 of services performed during the month have not been recorded as of June 30. Instructions (a) Prepare the adjusting entries for the month of June. P3-2B Maquoketa River Resortopened forbusiness on June 1 with eight air- conditioned units. Its trial balance before adjustment on August 31 is as follows. MAQUOKETA RIVER RESORT Trial Balance August 31, 2017 AccountNumber Debit Credit
- 7. 101 Cash $ 19,600 126 Supplies 3,300 130 Prepaid Insurance 6,000 140 Land 25,000 143 Buildings 125,000 149 Equipment 26,000 201 Accounts Payable $ 6,500 208 Unearned Rent Revenue 7,400 275 Mortgage Payable 80,000 301 Owner’s Capital 100,000 306 Owner’s Drawings 5,000 429 Rent Revenue 80,000 622 Maintenance Expense 3,600 726 Salaries Expense 51,000 732 Utilities Expense 9,400 Other data: 1. Insurance expires at the rate of $300 per month. 2. A count on August 31 shows $800 of supplies on hand. 3. Annual depreciationis $6,000 on buildings and $2,400 on equipment. 4. Unearned rent revenue of $4,800 was earned prior to August 31. 5. Salaries of $400 were unpaid at August 31. 6. Rentals of $4,000 were due from tenants at August 31. 7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.) Instructions (a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August31