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REVIEW QUESTIONS: Chp.1 and 2

EXERCISE 1

BRC
Trial Balance
January 31, 2021
ACCOUNT DEBIT CREDIT
Cash $ 5,900
Accounts receivable 3,700
Office supplies 2,600
Office furniture 15,000
Building 40,000
Land 20,000
Accounts payable $ 3,800
Jane Frideris, capital, January 1,2021 80,000
Jane Frideris, withdrawals 2,500
Service revenue 11,700
Advertising expense 2,000
Equipment rental expense 1,200
Salary expense 2,200
Utilities expense 400
Total $95,500 $95,500

Prepare the following financial statements for Blue Ribbon Catering.

1. Income statement for the month ended January 31, 2021.

2. Statement of owner’s equity for the month ended January 31, 2021.
3. Balance sheet at January 31, 2021.

EXERCISE 2

Bill Ronalds started a catering service called Blue Ribbon Catering. During the first month of operations,
January 2021, the business completed the following selected transactions:

a. Ronalds began the company with an investment of $50,000 cash and an equipment valued at
$26,000. The business gave Ronalds owner’s equity in the business.

b. Paid $8,000 for food service equipment.

c. Purchased supplies on account, $14,800.

d. Paid employee salary, $12,600.

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e. Received $4,000 for a catering job or for service.

f. Performed services at a wedding on account, $8,600.

g. Paid $12,000 of the account payable created in transaction c.

h. Received a $1,600 bill for advertising expense that will be paid in the near future.

i. Received cash on account, $2,200.

j. Paid the following cash expenses for the current month:

(1) Rent, $3,000.

(2) Insurance, $1,600.

k. Ronalds withdrew $12,000 for personal use.

Required
1. Record the transactions in the journal. Use the letters to identify the transactions.
2. Open the T-account for Cash, and post the transactions to this T-account and calculate the
ending balance.