Exercises 33 3. Purchaseu equipment on account, 4. Billed customers for services performed. S. Withdrew cash for owner's personal use. 6. Received eash from customers billed in (4). 7. Incurred advertising expense on account. 8, Purchased additional equipment for cash 9. Recsived eash from customers when service was performed, Instructions List the niumbers of the above transactions and descibe the effect of each transaction on as- S215 liabilities, and owner's equity For example. the fist answer i: (1) Increase in assets and in- rease in owner's equity. Sas Rollins Computer Timeshare Company entered into the following transactions during — Analyze the effect of reamsae May 2005. omy on asvers abalities, aet equi (80 6, 7) 1, Purchased computer terminals for $21,500 from Digital Equipment on account. 2. Pid $4,000 cash for May rent on storage space. 3. Received $15,000 cash from customers for contracts billed in Apr 4. Provided computer services to Fisher Construction Company for $3,000 cash. : 8. Paid Northern States Power Co. $11,000 cash for energy usage in May. 6. Rollins invested an additional $32,000 in the business. 7. Paid Digital Equipment for the terminals purchased in (1) above. & Incurred advertising expense for May of $1.200 on account. Instructions Indicate with the appropriate letter whether each ot the transactions above result in: (a) an increase in assets and a decrease in assets, (b) an increase in assets and a (6) an increase in assets and an increase in li (d) a decrease in assets and a decrease in owner's equity. (e) a decrease in assets and a decrease in liabilities. (0 an increase in liabilities and a decrease in owner's equity. (g) an increase in owner's equity and a decrease in E1-4 An analysis of the transactions made by J. L. Kang & C cd public accounting Analyze ransactions and come firm, for the month of August is shown below. Each increase and decrease in owner's equity is pute net income, explained. (0.7) cash + Accounts Office. Accounts 4 Owner's Equity 7 Receivable * Supplies * Equipment Payable J.L. Kang, Capital ¥ 1. +815000 815.000 Investment 2 =2,000 * +$5.000 +53,000 2-750 +8750 4. 42.600 —+83.700 46.300 Service Revenue 5. =1.500 =1.500 6. =2000 =2.00 Drawings 1-650 650, Rent Expense +450 ~450 9. 3900 Salaries Expense 10, +500 Utilities Expense Instructions . (a) CESS Describe each transaction that occurred for the month (b) Determine how much owner's equity inereased for the month, (©) Compute the amount of net income for the month. 1-5. An analysis of transactions for J, L. Kang & Co. was presented in El Prepare an nome statement Instructions online Prepare an income statement and an owner's equity statement for August and a balance sheet ‘at August 31, 2005.Instructions Prepare a correct balance sheet. E1-10 Jan Way isthe sole owner of Bear Park, a public camping ground near the Lake Mead National Recreation Area. Jan has compiled the following financial information as of Decem- ber 31, 2008. Revenues during 200S—camping fees $140,000 Revenues during 200S—general store 47,000 Accounts payable 11.000 Cash on hand 20,000 Original cost of equipment 105,500 Instructions Market value of equipment $140,000 Notes payable 60,000 Expenses during 2005 150,000 Supplies on hand 2.500 (a) Determine Jan Way's net income from Bear Park for 2005, (b) Prepare a balance sheet for Bear Park as of December 31, 2005, E1-11 Presented below is financial information related to the 2005 operations of Debra-Joan Cruise Company. Maintenance expense Property tax expense (on dock facilites) Salaries expense Advertising expense Ticket revenue Instructions $97,000 10,000 142,000 3500 335000 Prepare the 2005 income statement for Debra-Joan Cruise Company. Problems: SetA 35, Compute net income and prepare a balance sheet (80 8) Prepare an income statement. (80 8) E1412 Presented below is information related to the sole proprietorship of Douglas William, — Pepere an owner’ equity attorney. Legal service revenue—2005 Total expenses—2005 Assets, January 1, 2005 Liabitities, January 1, 2005, Assets, December 31, 2005 Liabilities, December 31, 2005 Drawings—2005 astructions 340,000 211,000 ‘85.000 2,000 168,000 80.000 Prepare the 2005 owner's equity statement for Douglas William’s legal practice. ae SET A P1-1A On April, Holly Palmer established Matrix Travel Agency. The following transactions ‘were completed during the month. 1. Invested $10,000 cash to start the agency. 2. Paid $400 cash for April office rent. 3. Purchased office equipment for $2.500 cash. 4, Incurred $300 of advert 5. Paid $600 cash for offic supplies. ig costs in the Chicago Tribune, on account. 6. Earned $7,500 for services rendered: $1,000 cash is received from customers. and the bal- ance of $6,500 is billed to customers on account, 7. Withdrew $200 cash for personal use. 8. Paid Chicago Tribune amount due in transaction (4). 9. Paid employees’ salaries $2.200. Instructions Received $5,000 in cash {rom customers who have previously been billed in transaction (6). (a) Prepare a tabular analysis of the transactions using the following column headings: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, and Holly Palrr Capital. (so 8) Analyze transactions and ‘compute net income. (50 6, = (@) Ending capital $14,40036 © CHAPTER 1 Accounting in Action (b) Net income $4,600 (b) From an analysis of the column Holly Palmer, Capital, compute the net income or net loys fonApril, Analyze mansactions and PAK Manly Arnokl opened a law office, Mandy Arnold, Aworney at Law om July 125, rapare come statement, fn July 3U. the balance sheet showed Cash $4,000, Accounts Receivable $1.500, Supplies $5, overs equity staerent. and —_Cttice Equipment $5,000, Accounts Payable $4.200, and Mandy Arnold, Capital $6.900. During Saas is ; ‘August the following transactions occurred. 4 . 1, Collected $1,400 of Accounts receivable. 2, Paid $2.700 cash on accounts payable. Earned revenue of $7,500 of which $3,000 is collected in cash and the balance is due in Sep. tember. 4 Purchased adiionalofce equipment for $1.00 paying $40 in cash and the balance on account, Paid salaries $3000, rent for August $900, and advertising expenses $350 0 in cash tor personal use. 7. Received $2.000 rom Standard Federal Bank-—nioney borrowed on a note. payable & Incurred utility expenses for month on account $250. + Instructions (4) Prepare a tabular analysis of the August transactions beginning with July 31 balances. The column headings should be as follows: Cash + Accounts Receivable + Supplies + Office Equipment = Notes Payable + Accounts Payable + Mandy Arnold, Capital. , «bs Net income $3,600 (b) Prepare an income statement for August, an owner's equity statement for August, and a Tera! assets $13,600 balance sheet at August 31 (3) Ending capital $9,250 P1-3A On June J, Jennifer Garner started Divine Cosmeties Co., a company that provides in- dual skin care treatment, by investing $26.200 cash in the business. Following are the assets nd liabilities of the company at June 30 and the revenues and expenses for the month of June. Prepare ance statement, couners equity statement, anal ‘alorce shee. soe) Cash 310.000 Notes Payable Accounts Receivable 4.000 Accounts Payable Service Revenue ‘Supplies Espense ‘Cosmetic Supplies Gas and Oil Expense Advertising Expense Equipment Jennifer made no additional investment in June, but withdrew $1,700 in cash for personal use during the month, 25,000 Instructions (3) Ht w some $2,300 (a) Prepare an income statement and owner's equity statement for the month of June and a Onner's equity $26,800 balance sheet at June 30, 2005. Teta assets $21,000 (b) Prepare an income statement and owner's equity statement for June assiming the follow 0) Net income $3,000 ing data are not included above: (1) $800 of revenue was earned and billed but not col- Owner's equity $27,500 lected at June 30, and (2) $100 of gas and oil expense was incurred but no paid. Anazeansctons an pL-A8 Laura Stiner started her own consulting fem. Stiner Consulting. on’ Nay 1.2008. The prepare fauncial saucmens. “Mfoltowing transactions occurred during the month of May 10 7.8) May 1 Stiner invested $8,000 eash in the business. 2. Paid $800 for office rent for the month. 3 Purchased $500 of supplies on account. 5 Paid $50 to advertise in the County News 9 Received $3,000 cash for services provided. 2 Withdrew $700 cash for personal use. 15 Performed $3.300 of services on account, 7 Paid $3.00 for employee salaries. 20, Paid for the supplics purchased om account on May 3. Received a cass payment of $2.00 for services provided on account‘on May 15. 36 Borrowed $5:000 from the hunk on a note payable. 39 Purchased office equipment for $2400 on account 30. Paid $150 for utilities. ‘Problems: Set B 37 Instructions (2) Show the effects of the previous transactions on the accounting equation using the follow. (a) Fede capt $9,600 ing format, / Owner's AI sina ep Egaity 2 Cas Accounts Office “Notes, Accounts, L. Stiner Date Cash + Receivable * Supplies * Eauipment ~ Payable * Payable Capital Incode explanations for any changes inthe L.Stiner. Capital account in your analysis () Prepare an income statement for the month of May. (wy het neare $2300 {@) Prepare a balance sheet at May 31,2008 te) Cash $12.800 P1-54 Financial statement information aout four different companies isa follows Decemine financiers Wepe Sein Date Hind “stm wnd prepare ers exity eatoment Company Company Company Company {29,0 Aanuary 1, 2008 Ascts $75,000 $90,000 (e) $130,000 Liabilities 0,000 (a) 75,000 w) Owner's equity (a) 50,000 $4,000, 100,000 December 31, 2005 Assets, (b) 117,000 180,000 (ky Liabilities 55,000 62.000 (n) 80,000 Owner's equity 40.000 ) 100.000 spon ‘Owner's equity changes in yes Additional investment (©) 8.000 10.000 15.000 Drawings 10,000 () 12,000 oy Total revenues 350,000 400,000 @ 500.000 ‘Total expenses 335,000 385,000 360,000 0 Instructions (a) Determine the missing amounts, (Hint: For example, to solve for (a). Assets ~ Liabilities = ‘Owner's equity = $25,000.) (b) Prepare the owner's equity statement for Winger Company. (©) C=} Write a memorandum explaining the sequence for preparing financial state ments and the interrelationship of the owner’s equity statement to the income statement and balance sheet. Aes) £18 Mcinnes's Repair Shop was started on May 1 by Jane Melnnes. A summary of May. ‘transactions is presented below. M 1. Invested $10,000 cash 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 Incurred $250 of advertising costs in the Beacon News on account. 6, Received $3,100 in cash from customers for repair servies, 7. Withdrew $1,000 cash for personal use. 8. Paid parttime employee salaries $1,000. 9, Paid utility bills $140. 10, Provided repair service on account to customers $850. 1. C: eed cash of $120 for services billed in transaction (10) Instructions (a) Prepare a tabular analysis of the transactions, using the following column headings: Cash, (a) Ending cacsta! $11,160 Accounts Receivabie. Supplies. Equipment, Accounts Payable, and Jane Melnnes, Capital. Revenue is called Service Revenue.(b) Net income $2,160 Analyse transactions and Prepare income statement, ‘owners equity statement. and balance sheet (80 6, 7, 8) ) Enoing capital $16.330 tb) Net wacome $3,230 ‘Towa! assets $26,500 Prepere encome statement. comer eau starement. and alone shee. (a) Net eecome $1,600 Owner's eaurty $44,909 ‘Total assets $75,700 (0) Net income $1,000 Owners eauity $44,300 Analy ce transactions and prepare financial stotements (s0 7. 8) CHAPTER 1 Accounting in Action (b) From an analysis of the columa Jane Melnnes, Capital, compute the net income or net loss foyMay. Patricia Peter opened a veterinary business in Nashville, Tennessee. on August 1, On ‘Avast M, the balance sheet showed Cash $9,000, Accounts Receivable $1,700, Supplies $400, Office Equipment $6,000, Accounts Payable $3,600, and P. Perez, Capital $13,700. During Sep tember the following transactions occurred, 1. Paid $2,900 cath on accounts payable. 2, Collected $1,400 of necounts receivable, X. Purchased aultional office equipment for $2.100, paying $800 in cash ancl the halance on account. &. Earned revenue of $6.300, of which $2,500 is paid in cash and the balance is due in Octo te & Withdrew $600 cash for personal use. 6 Paid salaries $1,700, rent for September $900, and advertising expense $300. 7. Incurred utilities expense for month on account $170. & Received $10,000 from Capital Bank-money borrowed on mnote payable. Instructio (a) Prepare a tabular analysis of the September transactions beginning with August 31 bal- ances. The column headings should be as follows: Cash + Accounts Receivable + Sup- plies + Office Equipment = Notes Payable + Accounts Payable + P. Perez. Capital. () Prepare an income statement for September, an owner's equity statement for September, and a balance sheet at September 30. 1-38 On May |, Jacob Bablad started Skyward Flying School, a company that provides fly- ing lessons,-by investing $45,000 cash in the business. Following are the assets and liabilities of the company on May 31, 2005, and the revenues and expenses for the month of May. Cash $4,500 Notes Payable $30,000 Accounts Receivable °7.200-~—-Rent Expense 1.200 Equipment 64.000 Repair Expense 400 Lesson Revenue 6,600 -—Fuel Expense 2.500 Advertising Expense 500 Insurance Expense +400 "Accounts Payable 800 Jacob Bablad made no additional investment in May. but he withdrew $1,700 in cash for per- sonal use. instructions (a) Prepare an income statement and owner's equity statement for the month of May and @ balance sheet at May 31. (b) Prepare an income statement and owner's equity statement for May assuming the follow- ing data are not included above: (1) $900 of revenue was earned and billed but not col- lected at May 31, and (2) $1,500 of fuel expense was incurred but not paid. of Pat Donahue started his own delivery service, Donahue Deliveries, on June 1, 2005. The following transactions occurred during the month of June. June 1 Pat invested $10,000 cash in the business. 2 Purchased a used van for deliveries for $10,000. Pat paid $2,000 cash and signed & note payable for the remaining balance, 3 Paid $500 for office rent for the month. 5 Performed $2.400 of services on account. 9 Withdrew $200 cash for personal use, 12 Purchased supplies for $150 on account 15 Received a cash payment of $750 for services provided on June 5. 17 Purchased gasoline for $100 on account, 20. Received a cash payment of $1,500 for services provided. 23. Made a cash payment of $500 on the note payable. 26 Paid $250 for utilities (29 Paid for the gasoline purchased on account on June 17, 30. Paid $1,000 for employee salaries.Exercises 73 CuenG Company Trial Balance December 31, 2005 Debit Credit Cash % $10,800 Prepaid Insurance $3300 Acowunts Payable 3000 Uneamed Revenue 4.200 B,Chang, Capital 13,000 Cheng. Drawing 4500 Service Revenue 25,600 Salaries Expense 18,600 Rent Expense 2.400 19.600 $52,000 AA Selected transactions for H. Burns, an interior decorator, in her first month of business, — Idenify debts eres and re as follows. ‘normal balances Jan, 2 Invested $15,000 cash in business. (so 2) 3. Purchased used car for $4,000 cash for use in business, 9. Purchased supplies on account for $500. 11. Billed customers $1,800 for services performed. 16 Paid $200 cash for advertising. 20 Received $700 cash from customers billed on January.1). 23. Paid creditor $300 cash on balance owe: 28 Withdrew $2.000 cash for personal use of owner. Instructions For each transaction indicate the following. (a) The basic type of account debited and credited (asset, liability, owner's equity). (b) The specific account debited and credited (cash, rent expense, service revenue, ete). (©) Whether the specific account is increased or decreased. (@) The normal balance of the specific account. : Use the following format, which the January 2 transaction is given as an example. Account Debited p Account Credited @—(b) © @ (a) (by © Oo) Basic Specific Normal Basic Specific Normal Date Type Account Effect Jan.2 Asset — Cash Increase ‘Type Account Effect Balance Owner's” H.Burns, Increase Credit Equity Capital E2-2 Data for H. Burns, Joumnalize transactions Instructions (so 4 Journglize the transactions using journal pagiéJ1. (You may omit explanations) tetior decorator, are presented in E2. YA Presented below is information r Oct od to Robbins Real Estate Agency. Analyze transactions ond nee tere he fo Lynn Robbins begins business as a real estate ugent witha cash investment of $20.00, termite see Hires an administrative assistant, a Purchases office furniture for $1,900, on account, Sells house and fot for B. Kidman; bis B, Kidman $3,200 for 27, Pays $700 on the balance related 10 the transaction of Octat 30. Pays the administrative assistant $2,000 in salary for October. ty services provided. 3. Instructions Prepare the debit-credit analysis for each tr ition a illustrated «in pages 58-62,76 CHAPTER 2. The Recording Process Instructions Far ench erro (a) Indicato whether the trial balance will balance. () IL the trial balance will not balance, indieate the amount of the difference. (e) Indicate the trial balance éolumn that will have the larger total. Cone neh error separately Use the fllowing form in which ertor (1) is given as an example (a) (b) (©) Eres In Balance Difference Larger Column, (dy No ‘$400 ° debit Prepare a iia balance. 2-10, ‘The secqunts in the ledger of Speedy Delivery Service contain the following balance, 180.2. 7) con July 31,2005, Accounts Receivable $10,642 Prepaid Insurance $1,968 ‘Accounts Payable 8396 Repair Expense 961 Cash 1 Service Revenue 10410 Delivery Equipment’ 49,360 LLM. Speedy. Drawing 10 Gas and Oil Expense 75K ILM, Speedy, Capital 44636 Insurance Expense 523 * Salaries 442% Notes Payable 26480 815, Instructions Prepare a trial balance with the accounts arranged missing umount for Cash, strated in the chapter and fill in the Journalice a series of ian Surepar Miniature Golf and Driving Range was opened on Mach 1 by Bill Affect transactions The following selected events and transactions occurred during, M 660,04) Mar, 1 Invested $60,000 cash in the business. @ 3 Purchased Lee's Golf Land for $3800 cash. The price consists of land $23,000, build {ng $9,000, and equipment $6,000, (Make one compound entry.) 5 Advertised the opening of the driving range and miniature golf course, paying ad- vertising expenses of $1,00. 6 Paid cash $1,480 for a one-year insurance policy 10 Purchased golf clubs and other equipment for $2,40 from Parton Company payable in 30 days. 1K Received $800 in eash for golf fees earned. 19. Sold 100 coupon books for $15 each. Bach book eont holder to play one round! of miniature 25 Withdrow $1,000 cash for personal use W Pid safaris of $600. WPaid Parton Company in ful ML Received $500 cash for fees earned, ns 10 coupons that enable the FoF to hit one bucket of golf balls Hill Attieck uses the following ace Accounts Payable; Unearned Reven eri, Advedtising Exp nits: Cash; Prepaid Insurance; Lands; buildings; Equipment Hill Affleck, Capital; Bill Affleck, Drawing: Golf Ree ‘and Salaries Expense Instructions Jourpalize the Match transactions suctions post, — YAN Sui Deneh a licensedarchiteet, During the first month of the operation of her he the following events and transactions occurred, Aournalice t April 1 1 nt at a salary Of $100 per Week payable monthly 2 nih $800, 3 Putchaved atebites tural supplies on account from Halo Company $1,590Problems: Set A = 77 10 Completed blueprints on a carport and! billed client $900 for services, 1 Received $500 cash advance from R. Welk for the design of a new home. 20. Received $1,500 cash for services completed and delivered to P, Donahue, 30 Paid secretary-receptionist for the month $1,500, 30 Paid $600 to Halo Company for accounts payable due. Judi uses the following chart of accounts: No, 101 Cash, No, 112 Accounts Receivable, No. 126 ‘Supplies, No, 201 Accounts Payable, No, 208 Unearned Revenue, No. 301 Judi Dench, Capital, No. 400 Service Revenue, No. 726 Salaries Expense, and No, 729 Rent Expense, Instructions {@) Journalize the transactions "Hai tulsa ila'2a 000 (b) Post to the ledger accounts. (© Prepare a trial balance on April 30, 2005. P2-3A Chambers Brokerage Services was formed on May 1, 2005. The following transactions Joumaize rantactions pos took place during the first month, and prepare a trl balence ‘Transactions on May I: ‘an nancial saremens 1, Dennis Chamibers invested $120,000 cash in the company, as its sole owner, ee 2 Hired two employees to work in the warchouse. They wili each be paid a salary of $2,000 per month 3. Signed a 2-year rental agreement on a warchouse; paid $36,000 cash in advance forthe first year, (Hint: The portion ofthe cost related to May 2005 is an expense fortis month.) 4. Purchased furniture and equipment costing §70,000. A cash payment of $20,000 was made immediately; the remainder will be paid in 6 months. | S. Paid $3,000 cash for a one-year insurance policy on the furniture and equipment. i (Hint: The portion ofthe cost related to May 2005 isan expense for this month.) ‘Transactions during the remainder of the month: 6 Purchased basi office supplies for $1,000 cash. 7 Purchased more office supplies for $3,000 on account 8. Total revenues éarned were $30:000—$10,000 cash and $20,000 on account. ____9. Paid $800 to suppliers for accounts payable due. “40. Received $5,000 from customers in payment of accounts receivable. 11, Received uiiity bills inthe amount of $400, to be paid next month. 12. Paid the monthly salaries ofthe two employees, totalling $4000. Instructions (a) Prepare journal entries to record each of the events listed. “Til balance totals $202,600 (b) Post the journal entries to T accounts. (©) Prepare a trial balance as of May 31, 2005. (@) Prepare an income statement and a statement of owner's equity for Chambers Brokerage Services for the month ended May 31,2005, and a balance sheet as of May 31, 2005 | P2-4A The trial balance of Ron Salem Co. shown below does not balance. Prepare a correct trial balance, (so 7) Ron Satem Co. Trial Balance June 30, 2005 Cash ‘Accounts Receivable Supplies Equipment Accounts Payable Unearned Revenue 2200 | R. Salem, Capital Salem, Drawing 800 Service Revenue Salaries Expense 3,400 Office Expense 910 34341 8-A78 CHAPTER 2 The Recording Procoss Taal balance totals $16,348 Aoumnalize transactions post, ‘and prepare 4 trial balance. 180 2, 4, 6, 7) al balance totals $115,500 Each of the listed necounts has a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors 1. Cash received from a customer In payment of its aecount was debited for $$70.and Accounts Receivable was eredited for the same amount The actual collection was for $75, 2. ‘The purchase of w typewriter on account for $MO was recorded ws a debit to Supplies for $40 and a ereullt to Accounts Payable for $40, AX Services were performed on account for a client for $490. Accounts Receivable was debited for $890, and Service Revenue was credited for $49, 4. A debit posting to Salaries Expense of $367 was omitted. A payment of a balance due for $309 was credited to Cash for $309 nnd credited to Accounts Payable for $390. 6, ‘The withdrawal of $500 cash for Salem's personal use was debited to Salaries Expense for $500 and credited to Cash for $500. Instructions Prepare a correct tral balance. (Hint: It helps to prepare the correct journal entry for the trans- action described and compare it to the mistake made). PZ5A ‘The Russo Theater, owned by Alan Russo, will begin operations in March. The Russo ll be unique in that it will show only triple features of sequential theme movies. As of March 1, the ledger of Russo showed: No. 101 Cash $16,000; No. 140 Land $42.00; No. 145 Buildings (Concession stand, projection room, ticket booth, and screen) $18,000; No. 157 Equipment ble $12,000; and No. 301 A. Russo, Capital $80,000. During the month of March the following events and transactions occurred. Mar, 2 Rented the three Star Wars movies (Star Wars, The Empire Strikes Back, and The Re- {urn of the Jedi) to be shown for the first 3 weeks of March. The film rental was $9,000, ‘$3,000 was paid in cash and $6,000 will be paid on March 10. 3. Ordered the first three Star Trek movies to be shown the last 10 days of March. It will cost $300 per night, 9 Received $6,500 cash from admissions. 10 Paid balance due on Star Wars movies rental and $3,000 on March 1 accounts payable, 11 Russo Theater contracted with M. Brewer Company to operate the concession stand. Brewer is to pay 10% of gross concession receipts (payable monthly) for the right to operate the concession stand. 12 Paid advertising expenses $800. 20 Received $7,200 cash from customers for admissions. 20. Received the Star Trek movies and paid the rental fee of $3,000. 31 Paid salaries of $4,800. 31 Received statement from M. Brewer showing gross receipts from concessions of $8,000 and the balance due to Russo Theater of $800 ($000 x 10%) for March. Brewer paid one-half the balance due and will remit the remainder on April S. 31 Received $12,000 cash from customers for admissions. In addition to the accounts identified above, the chart of accounts includes: No. 112 Accounts Revenue, No, 406 Concession Revenue, No. 610 Advertising, Expense, No. 632 Film Rental Expense, and No. 726 Salaries Expense. Instructions (a) Enter the beginning balances in the ledger. Insert a check mark (7) in the reference col- umn of the ledger for the beginning balance. (b) Journalize the March transactions. (©) Post the March journal entries to the ledger. Assume that all entries are posted from page 1 of the jour: (d) Prepare a trial balance on March 31, 2005. 8-BProblems: SetB 79 i a) PZ-1B Frontier Park was started on April by C.J. Ama The following selected events and Journutie a wrice of fransactions ccurred during April amo tai Apt. L Amaro invested $50,000 cash in the business, ig ait) * 4 Purchased lanl costing SM for cash, s > 8 Incurred advertising expense of $1,800 on account Peadane’ UL Paid sataries to employees $1,500, = 12 Hired park manager ata salary of $4,000 per month, effective May 1. 1 Paid $1,S00 cash for a one-year insurance policy. 17 Withalrew $600 cash for personal use 20 Reevived $5,700 in cash for admission fees 25 Sold 100 coupon books for $25 each, Each book contains 10 coupons that entitle he holder to one admission to the park, 30 Received $8,900 in cash admission fees. 30 Paid $900 on balance owed for adver ng incurred on April 8 Amaro uses the following accounts: Cash; Prey ccarned Admission Revenue: C. J. Amaro, Capital; Advertising Expense; and Salaries Expense. Insurance; Land: Aecounts Payable; Un- J. Amaro, Drawing: Admission Revenue: Instructions Journglize the April transactions P2/AB Kara Shin is a licensed CPA. During the first month of ope the —Joumalize ranacrioms part oflowing events and transactions occurred. ‘and prepare rial balance. invested $20,000 cash, (50 2, 4, 6, 7) ed a Secretary-receptionist ata salary of $1,000 per month. 3. Purchased $1,500 of supplies on account from Read Supply Company. 7. Paid office rent of $900 cash for the month. 11 Completed a tax assignment and billed client $2,100 for services provided. 12 Received $3,500 advance on a management consulting engagement. 17. Received cash of $1.200 for services completed for H. Amold Co. 31 Paid secretary-receptionist $1,000 salary for the month. 31 Paid 40% of balance due Read Supply Company. Kara uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 205 Unearned Revenue, No. 301 Kara Shin, Capital, No. 400 Service Revenue, No. 726 Salaries Expense, and No. 729 Rent Expense. Instructions (a) Journalize the transactions Tal balance totals $27,700 {(b), Post to the ledger accounts. / Prepare a trial balance on May 31,2005. 'P2-3B. Matk Hockenberry owns and manages a computer repair service, which had the fol. Joumalize and past lowing trial balance on December 31, 2004 (the end of is fiscal year). ‘transactions, prepare a ial balance, and determine elements of nancial Byte REPAIR SERVICE iawn, Trial Balance {80 2, 4, 6, 7) December 31, 2004 Cash 5 8000 Accounts Receivable 15,000 Parts Inventory 13,000, Prepaid Rent 3,000 Shop Equipment 21,000 Accounts Payable Mark Hockenberry, Capital 1000 z60 Tal balance totals $63,000) CHAPTER 2 THe Recording Praca seo connect ta a Aunwarieca Hansaethons for January 208 yore a feller 1s Adtostioing tins poll J cash, $e, 2, Ailiional reps Pars Hnventiny yequinost on [A Atlcultanoants phar Sahl Heyl $2000, 4, Cosh collected fr customers i payment oC wentints tecelvabte $4400, 8, Cust pt to eveaitons for estnunty payable de $48,000, 4. Wey parts used suring January $4001. (int: Debit this Repair Parts Expense.) 41 Nepal wrviees performed during banuary! tor east $5.01, on wceount 99.00, 1 fv Janviary, pall in eas, $8, 9, Hout expense for January ruenided. However, no eash was paid out for rent during Janu- wy. A rent payment had fen made for 4 months, in advance, on December 1,206, in the mount $4,000, 10, Mark's arawings luring January were $240. unt $4.00 Instructions (a) Lixplain why the December 81,2004, balance in the Prepaid Rent account is $3,000, (Refer 1 the ial Hatanee nnd item (4) above) (b) Open T accounts for each af the accounts fisted in the trial bal Hralanie fone 20815, (6) Prope Journal eptiies to record euch of the January transactions, (a) Fist the journal entries to the accounts in the ledger. (Add accounts as needed.) (6) Prepare W trial balance us of January M1, 2005, (Determine the totwl assets as of January 31,2005, (It is not necessary to prepare a balance shoet, Simply lst the relevant amounts from the trial balance and calculate the total.) (n). Determing the net income or loss for the month of January 2005. (It is not necessary to pre- Fe an Income statement, Simply list the relevant amounts from the trial balance, and cal-, mount of the net income oF Loss) ice, and enter the opening P2-4B ‘Ihe trial balance of the Garland Company shown below does not balance. GARLAND ComPANY Tial Balance May 31, 2005 Debit — Credit Cash $3,850 ‘Accounts Receivable $2,750 Prepaid Insurance 700 Equipment 12,00 ‘Accounts Payable 4,500 Property Taxes Payable 560 M, Garland, Capital 11,700 Service Revenue 8,690 4200 1,100 Property Tax Expense 80) S080 $2080 ‘Your review of the ledger reveals that gach account has a normal balance, You also dit cover the following errors 1. ‘The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Property Tax EX- frense were each understated $100 2 ‘Transposition errors were made in Accounts Recei postings made, the correct halances were $2,570 and $8,960, respectively. 3A debit posting to Salaries Expense of $200 was omitted, 4. AS11000 cash drawing by the owner was debited to M. Gatland, Capital for $1,000 and ered- Hed to Cash for $1,000, § Ais Puce ‘ol supplies on account was debited to Equipment for $520 and eredited 10 ‘sh for $820, ble and Service Revenue. Based onBroadening Your Perspective — 64 & A cash payment af $450 for ave reditext to Cash for S48. 7. A collection from a customer fot ‘counts Payable for $420. Instructions Prepare a contest trial hatance: Note that the chott ef aceon rawng. aonl Sapte. (iat H helps to prepare the Gay Sescribeal ann compare #40 the mistake made.) 2-98 The Lake Theater ts owned by Alvin Wasicko. All facilities were completed on March denna ‘MAL this time. the fodger showed: No. 101 Cash $6.00; No, 140 Laund $10.000, Ne 45 Hulk ate! prepoe @ ail batanee ings (concession stan, pyc n. ticket booth, and screen) $8000, No. 157 Equipment (80 2.4, 6. 7) SAM No NT Accounts Payable $2.01, No. 278 Mortgage Payable $4,000, and No, 01 Alvin ™ Wasicker Capital $20,008 Daring Apo the following evgnts and transaetions occurred. are ny Sas aebvited 1 Advertising F'gpense for SA an hw. debated ty Cash for $4200 nd credited for Ac Fiat Wotan tags Bd reel journal entry forthe teans svt, pt Hache Paid film rental of $8 on fist movie 3. Ondcred two additional films at $1,000 each, bon 9 Reocived $1.0 each fromm admissions. 10 Made $2.08 payment on mo ul $1,000 for accounts payable due M1. Lake Theater cantracted with R. Zarle Company to operate the eoncess (payable monthly) for the ri 12, Pal advertising expenses $300 2 Received one of the films ordered on April 3 and was billed $1,000, The film will be shown in Apel 25. Received $5.20 cash from wlmissions 29 Paid salaries $1,601 30 Received statement from R. Zarle showing press concession receipts, of $1.00K) and the balance due to The Lake Theater of $170 ($1.00 x. 17%) for Apnil, Zarle paid ‘one-half of the balance due and will remit the remainiler on May 5. XO Prepaid $900 rental on gyccial film tw be run in May. In addition to the accounts identified above, (he chart of wceouints shows: NOI TT2 Adgounts ceivable, No. 1¥6 Prepaid Rentals, No 40S Admission Reyenue, No, 406, Concession Revenue No. 610 Advertising Expenye, No. 632 Lilm Reatal Expense, and No. 726 Salatiey Expense Instructions (a) Enter the beginning balances in the ledger as of Apfil I. Insert s'check mark (/) inthe tel Hy tatyne Hats $4100 erence column of the ledger for the beginning balance, {b) Journalize the April transactions, (©) Post the Apeil journal entries to the ledger. Assume that all entries are pasted from page 1 Of the journal (a) Prepare a trial balarice om April 30,2005, [ BROADENING YOUR PERSPECTIV Financial Reporting and Analysis & FINANCIAL REPORTING PROBLEM: PepsiCo BYP2-1 The financial statements of PepsiCo are presented in Appendix A. ‘The notes accompanying the statements contain the following selected accounts, stated in millions of ro — oe, Accounts Payable $4,998 Income Taxes Payable $492 Accounts Receivable 2831 Interest Expense 178 Property, Plant, and Equipment 739% Inventory 1a