Case 4.

3 Copies Express*
Question 1:
COPIES EXPRESS Income Statement For the Year Ended December 31, 2006 Sales Operating expenses: Cost of supplies used Wages and salaries Heat, light, and power Selling and administration Depreciation Total Operating income Interest expense Income before taxes Federal income taxes Net income $252,200 $60,250 85,750 15,000 28,375 15,000 204,375 47,825 2,880 44,945 11,593 $ 33,352

Assets Current assets Cash Accounts receivable Supplies inventory Total Property, plant and equipment Building and equipment Less: Accumulated depreciation Land Totl NCA Total Assets

COPIES EXPRESS Balance Sheet as of December 31, 2006 Liabilities and Owners Equity Current liabilities $ 36,195 Accounts payable 11,000 Taxes payable 26,625 Total $ 73,820 Long-term debt: Bank loan $300,000 Owners equity: Capital stock 15,000 285,000 Retained earnings 12,000 Total 297,000 Total liabilities and owners $370,820 equity

9,875 11,593 $ 21,468 12,000

304,000 33,352 337,352 $370,820

Question 2:
Journal Entries Cash Sales Accounts Receivable Sales Cash Accounts Receivable Wages and Salaries (expense) Cash Heat, Light, and Power (expense) Cash Supplies Inventory Cash Selling and Administration (expense) Cash Interest Expense Cash Bank Loan Cash Accounts Payable Cash Supplies Inventory Accounts Payable Depreciation Expense Accumulated Depreciation Accounts Receivable Sales Cost of Supplies Used Supplies Inventory Tax Expense Taxes Payable Income Summary Retained Earnings Debit 176,450 64,750 64,750 64,750 64,750 85,750 85,750 15,000 15,000 52,600 52,600 28,375 28,375 2,880 2,880 12,000 12,000 10,400 10,400 9,875 9,875 15,000 15,000 11,000 11,000 60,250 60,250 11,593 11,593 33,352 33,352 Credit 176,450

1 2

3 4 5 6 7 8 9 10 11 12 13 14 15

Case 4.4Waltham Oil & Lube Center, Inc.

Question 1:
Journal Entries 1) $40,000 Capital contribution Cash Capital 2) $40,000 Deposit with National Deposit National Cash 3) $6,000 furniture purchase Furniture Cash 4) $10,000 Capital contribution Cash Capital 5) $1,200 Insurance payment (12 months) Prepaid Insurance Cash 6) $35,450 deductions from deposit Oil and grease inventory Operating supplies and uniforms Equipment Deposit 7) $1500 Lease payment Lease expense Cash 8) $49,800 Equipment payable Equipment Equipment payable 9) $108,600 Bank deposits Cash Parking revenue Services revenue 10) $8,230 Inventory purchases (oil and grease) Inventory Cash 11) $34,560 Payroll payments Payroll expense 34,560 8,230 8,230 108,600 3,300 105,300 49,800 49,800 1,500 1,500 6,320 4,130 25,000 35,450 1,200 1,200 10,000 10,000 6,000 6,000 40,000 40,000 Debit 40,000 40,000 Credit

Cash 12) $1700 Utilities payments Utilities expense Cash 13) $6,600 miscellaneous payments Miscellaneous expenses Cash 14) $26,400 Lease payments Lease expense Cash 15) $2,490 Equipment payables payments Equipment payable Cash 16) $4,500 Withdrawals (Knight) Withdrawals Cash 17) $340 Receivable parking Accounts receivable Parking Revenues 18) $730 Receivable local merchant Accounts receivable Service Revenues 19) $2100 Unpaid payroll Payroll expense Accrued payroll 20) $350 Unpaid utilities Utilities expense Accrued utilities 21) $9,260 Cost of Sales Cost of Sales Inventory 22) $150 Furniture depreciation Depreciation expense Accumulated depreciation 23) $3,750 Equipment depreciation Depreciation expense Accumulated depreciation 24) $400 August parking prepayments Cash Deferred parking revenue 25) $300 Insurance expense 400 3,750 150 9,260 350 2100 730 340 4,500 2,490 26,400 6,600 1,700

34,560

1,700

6,600

26,400

2,490

4,500

340

730

2100

350

9260

150

3,750

400

Insurance expense Prepaid Insurance

300 300

Question 2:
Balance at the end of the July Capital $50,000 Accumulated depreciation $3,900 Prepaid assets $900 Cash balance $25,820 Account Receivable $1070 Liabilities $12,410

Question 3:
Withdrawals Cost of sales Parking revenues Lease expense Total revenue $4,500 $9260 $3,640 $27,900 $109,670

Question 4:
Since the checks were received before the end of the accounting period, hence the $400 prepaid August parking checks are part of the end of period cash balance.