GRADUATE SCHOOL OF BUSINESS AND PUBLIC ADMINISTRATION

UNIVERSITY OF LIBERIA
ACCT 511 Sec 04
FINAL ASSIGNMENT

PART I: COMPREHENSIVE PROBLEM

Jartu Mills opened Jartu Maids Cleaning Service on July 1, 2017. During July, the company completed the
following transactions.

July 1: Invested $14,000 cash in the business.

1: Purchased a used truck for $10,000, paying $3,000 cash and the balance on account.
3: Purchased cleaning supplies for $800 on account.
5: Paid $1,260 on a 1-year insurance policy, effective July 1.
12: Billed customers $3,800 for cleaning services.
18: Paid $1,000 of amount owed on truck; and $400 of amount owed on cleaning supplies.
20: Paid $1,600 for employee salaries.
21: Collected $1,400 from customers billed on July 12.
25: Billed customers $1,900 for cleaning services.
31: Paid gasoline for the month on the truck, $400.
31: Withdrew $700 cash for personal use.

Instructions
a. Journalize and post the July transactions. Use T-accounts.
b. Prepare Trial balance at July 31.
c. Prepare and post the following adjustments:
1. Unbilled fees for services performed at July 31, were $1,300.
2. Depreciation on equipment for the month was $200.
3. One-twelfth of the insurance expired.
4. An inventory count shows $100 of cleaning supplies on hand at July 31.
5. Accrued but unpaid employee salaries were $500.
d. Prepare the income statement and owner’s equity statement for July, and a classified balance sheet
at July 31, 2017.
e. Journalize and post the closing entries.
f. Prepare a post-closing trial balance at July 31.

Part II: INVENTORY COSTFLOW METHODS

The following were transactions from Houston Electronics books.
Balance
Date Explanation Units Unit cost Total cost in Units
1/1 Beginning inventory 100 $10 $1,000 100
4/15 Purchases 200 11 2,200 300
8/24 Purchases 300 12 3,600 600
9/10 Sale 550 50
11/27 Purchases 400 13 5,200 450
$12,000
INSTRUCTION
a. Determine cost of goods sold using the FIFO, LIFO and average methods.
b. Determine the cost of the ending inventory.
 PART III: Allocation of Partnership’s income(Loss)

1. Olsen and Katch organized the OK Partnership on 1/1/01. The following entries were made into their capital accounts
during 01:

Olsen
Debits Credits
1/1 20,000
4/1 5,000
10/1 5,000

Katch
1/1 40,000
3/1 10,000
9/1 10,000
11/1 10,000

The partnership agreement called for the following in the allocation of partnership profits and losses:

Salaries of $48,000 and $36,000 would be allocated to Olsen and Katch, respectively

Interest of 8% on average capital balances will be allocated

Katch will receive a bonus of 10% on all partnership billings in excess of $300,000

Any remaining profits/losses will be allocated 60/40 to Olsen and Katch, respectively.

Required (account for each situation independently):

a. Determine the distribution of partnership net income. Assume the following priority of allocation:
interest, bonus, salaries, then remaining assuming partnership income of $85,000; partnership
billings amounted to $400,000

b. Determine the distribution of partnership net income of $165,000 on billings of $400,000. No

specific priority is given to any of the allocation criteria.

c. Determine the weighted average capital of Partners Olsen and Katch, respectively.