Exercise 3-13 & 14

The trial balances before and after adjustment for Garcia Company at the end of its fiscal

year are presented below.

GARCIA COMPANY

Trial Balance

August 31, 2008

Before After

Adjustment Adjustment

Dr. Cr. Dr. Cr.

Cash $10,400 $10,400

Accounts Receivable 8,800 9,800

Office Supplies 2,300 700

Prepaid Insurance 4,000 2,500

Office Equipment 14,000 14,000

Accumulated Depreciation—Office Equipment $ 3,600 $ 4,500

Accounts Payable 5,800 5,800

Salaries Payable –0– 1,100

Unearned Rent 1,500 600

Common Stock 10,000 10,000

Retained Earnings 5,600 5,600

Service Revenue 34,000 35,000

Rent Revenue 11,000 11,900

Salaries Expense 17,000 18,100

Office Supplies Expense –0– 1,600

Rent Expense 15,000 15,000

Insurance Expense –0– 1,500

Depreciation Expense –0– 900

$71,500 $71,500 $74,500 $74,500

Instructions

Prepare the adjusting entries that were made.

Exercise 3-14

The adjusted trial balance for Garcia Company is given in E3-13.

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Exercise 3-13 & 14

The trial balances before and after adjustment for Garcia Company at the end of its fiscal

year are presented below.

GARCIA COMPANY

Trial Balance

August 31, 2008

Before After

Adjustment Adjustment

Dr. Cr. Dr. Cr.

Cash $10,400 $10,400

Accounts Receivable 8,800 9,800

Office Supplies 2,300 700

Prepaid Insurance 4,000 2,500

Office Equipment 14,000 14,000

Accumulated Depreciation—Office Equipment $ 3,600 $ 4,500

Accounts Payable 5,800 5,800

Salaries Payable –0– 1,100

Unearned Rent 1,500 600

Common Stock 10,000 10,000

Retained Earnings 5,600 5,600

Service Revenue 34,000 35,000

Rent Revenue 11,000 11,900

Salaries Expense 17,000 18,100

Office Supplies Expense –0– 1,600

Rent Expense 15,000 15,000

Insurance Expense –0– 1,500

Depreciation Expense –0– 900

$71,500 $71,500 $74,500 $74,500

Instructions

Prepare the adjusting entries that were made.

Exercise 3-14

The adjusted trial balance for Garcia Company is given in E3-13.

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E3-12

Selected accounts of Tabor Company are shown below.

Supplies Expense

7/31 800

Supplies Salaries Payable

7/1 Bal. 1,100 7/31 800 7/31 1,200

7/10 400

Accounts Receivable Unearned Revenue

7/31 500 7/31 900 7/1 Bal. 1,500

7/20 1,000

Salaries Expense Service Revenue

7/15 1,200 7/14 2,000

7/31 1,200 7/31 900

7/31 500

Instructions

After analyzing the accounts, journalize (a) the July transactions and (b) the adjusting entries

that were made on July 31. (Hint: July transactions were for cash.)

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E3-12

Selected accounts of Tabor Company are shown below.

Supplies Expense

7/31 800

Supplies Salaries Payable

7/1 Bal. 1,100 7/31 800 7/31 1,200

7/10 400

Accounts Receivable Unearned Revenue

7/31 500 7/31 900 7/1 Bal. 1,500

7/20 1,000

Salaries Expense Service Revenue

7/15 1,200 7/14 2,000

7/31 1,200 7/31 900

7/31 500

Instructions

After analyzing the accounts, journalize (a) the July transactions and (b) the adjusting entries

that were made on July 31. (Hint: July transactions were for cash.)

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Exercise 3-11

A partial adjusted trial balance of Sila Company at January 31, 2010, shows the following.

SILA COMPANY
Adjusted Trail Balance
January 31, 2010
	Debit	Credit
Supplies	$871
Prepaid Insurance	2,430
Salaries Payable		$781
Unearned Revenue		70
Supplies Expense	924
Insurance Expense	405
Salaries Expense	1,776
Service Revenue		2,004

Instructions

Answer the following questions, assuming the year begins January 1.

(a)	If the amount in Supplies Expense is the January 31 adjusting entry, and $504 of supplies was purchased in January, what was the balance in Supplies on January 1?
	$ 1291
(b)	If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased?
Total premium $ 4860       Purchase date   Aug.1 2009
(c)	If $3,451 of salaries was paid in January, what was the balance in Salaries Payable at December 31, 2009?
$ 2456
(d)	If $1,577 was received in January for services performed in January, what was the balance in Unearned Revenue at December 31, 2009?
$ 1135 FOLLOW THE LINK TO GET THE ANSWER!!

Exercise 3-11

A partial adjusted trial balance of Sila Company at January 31, 2010, shows the following.

SILA COMPANY
Adjusted Trail Balance
January 31, 2010
	Debit	Credit
Supplies	$871
Prepaid Insurance	2,430
Salaries Payable		$781
Unearned Revenue		70
Supplies Expense	924
Insurance Expense	405
Salaries Expense	1,776
Service Revenue		2,004

Instructions

Answer the following questions, assuming the year begins January 1.

(a)	If the amount in Supplies Expense is the January 31 adjusting entry, and $504 of supplies was purchased in January, what was the balance in Supplies on January 1?
	$ 1291
(b)	If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased?
Total premium $ 4860       Purchase date   Aug.1 2009
(c)	If $3,451 of salaries was paid in January, what was the balance in Salaries Payable at December 31, 2009?
$ 2456
(d)	If $1,577 was received in January for services performed in January, what was the balance in Unearned Revenue at December 31, 2009?
$ 1135FOLLOW THE LINK TO GET THE ANSWER!!

Exercise 3-10

The income statement of Benning Co. for the month of July shows net income of $1,400 based on Service Revenue $5,500,Wages Expense $2,300, Supplies Expense $1,200, and Utilities Expense $600. In reviewing the statement, you discover the following.

1. Insurance expired during July of $400 was omitted.

2. Supplies expense includes $200 of supplies that are still on hand at July 31.

3. Depreciation on equipment of $150 was omitted.

4. Accrued but unpaid wages at July 31 of $300 were not included.

5. Services provided but unrecorded totaled $500.

Instructions

Prepare a correct income statement for July 2010.

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Exercise 3-10

The income statement of Benning Co. for the month of July shows net income of $1,400 based on Service Revenue $5,500,Wages Expense $2,300, Supplies Expense $1,200, and Utilities Expense $600. In reviewing the statement, you discover the following.

1. Insurance expired during July of $400 was omitted.

2. Supplies expense includes $200 of supplies that are still on hand at July 31.

3. Depreciation on equipment of $150 was omitted.

4. Accrued but unpaid wages at July 31 of $300 were not included.

5. Services provided but unrecorded totaled $500.

Instructions

Prepare a correct income statement for July 2010.

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Exercise 3-9

The trial balance for Pioneer Advertising Agency is shown in Illustration 3-3, p. 100. In lieu of the adjusting entries shown in the text at October 31, assume the following adjustment data.

1. Advertising supplies on hand at October 31 total $500.

2. Expired insurance for the month is $100.

3. Depreciation for the month is $50.

4. Unearned revenue earned in October totals $600.

5. Services provided but not recorded at October 31 are $300.

6. Interest accrued at October 31 is $70.

7. Accrued salaries at October 31 are $1,500.

Instructions

Prepare the adjusting entries for the items above.

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Exercise 3-9

The trial balance for Pioneer Advertising Agency is shown in Illustration 3-3, p. 100. In lieu of the adjusting entries shown in the text at October 31, assume the following adjustment data.

1. Advertising supplies on hand at October 31 total $500.

2. Expired insurance for the month is $100.

3. Depreciation for the month is $50.

4. Unearned revenue earned in October totals $600.

5. Services provided but not recorded at October 31 are $300.

6. Interest accrued at October 31 is $70.

7. Accrued salaries at October 31 are $1,500.

Instructions

Prepare the adjusting entries for the items above.

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Exercise 3-8

Andy Wright,D.D.S., opened a dental practice on January 1, 2010. During the first month of operations the following transactions occurred. 1. Performed services for patients who had dental plan insurance. At January 31, $875 of such services was earned but not yet recorded. 2. Utility expenses incurred but not paid prior to January 31 totaled $520. 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 equipment depreciates $400 per month. Interest is $500 per month. 4. Purchased a one-year malpractice insurance policy on January 1 for $12,000. 5. Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were on hand. Instructions Prepare the adjusting entries on January 31. Account titles are: Accumulated Depreciation—Dental Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Utilities Payable.

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Exercise 3-8

Andy Wright,D.D.S., opened a dental practice on January 1, 2010. During the first month of operations the following transactions occurred.

1. Performed services for patients who had dental plan insurance. At January 31, $875 of such services was earned but not yet recorded.

2. Utility expenses incurred but not paid prior to January 31 totaled $520.

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 equipment depreciates $400 per month. Interest is $500 per month.

4. Purchased a one-year malpractice insurance policy on January 1 for $12,000.

5. Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were on hand.

Instructions

Prepare the adjusting entries on January 31. Account titles are: Accumulated Depreciation—Dental Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Utilities Payable.

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 Exercise E3-7 

The ledger of Piper Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. 

Debits Credits 
Prepaid Insurance $3,600 
Supplies 2,800 
Equipment 25,000 
Accumulated 
Depreciation -Equipment 
$8,400 
Notes Payable 20,000 
Unearned Rent 9,900 
Rent Revenue 60,000 
Interest Expense -0- 
Wages Expense 14,000 

Instructions: 

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. 

Additional accounts are: Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expense.

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Exercise 3-6

Affleck Company accumulates the following adjustment data at December 31.
1. Services provided but not recorded total $750.
2. Store supplies of $300 have been used.
3. Utility expenses of $225 are unpaid.
4. Unearned revenue of $260 has been earned.
5. Salaries of $900 are unpaid.
6. Prepaid insurance totaling $350 has expired.

Instructions
For each of the above items indicate the following.
(a) The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).
(b) The status of accounts before adjustment (overstatement or understatement).

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Exercise 3-5

Drew Carey Company has the following balances in selected accounts on December 31, 2010.

Accounts Receivable $ -0-

Accumulated Depreciation—Equipment -0-

Equipment 7,000

Interest Payable -0-

Notes Payable 10,000

Prepaid Insurance 2,100

Salaries Payable -0-

Supplies 2,450

Unearned Consulting Revenue 40,000

All the accounts have normal balances. The information below has been gathered at December 31, 2010.

1. Drew Carey Company borrowed $10,000 by signing a 12%, one-year note on September 1, 2010.

2. A count of supplies on December 31, 2010, indicates that supplies of $800 are on hand.

3. Depreciation on the equipment for 2010 is $1,000.

4. Drew Carey Company paid $2,100 for 12 months of insurance coverage on June 1, 2010.

5. On December 1, 2010, Drew Carey collected $40,000 for consulting services to be performed from December 1, 2010, through March 31, 2011.

6. Drew Carey performed consulting services for a client in December 2010. The client will be billed $4,200.

7. Drew Carey Company pays its employees total salaries of $9,000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2010.

Instructions

Prepare adjusting entries for the seven items described above

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Exercise 3-4

Emeril Corporation encounters the following situations:

1. Emeril collects $1,000 from a customer in 2010 for services to be performed in 2011.

2. Emeril incurs utility expense which is not yet paid in cash or recorded.

3. Emeril’s employees worked 3 days in 2010, but will not be paid until 2011.

4. Emeril earned service revenue but has not yet received cash or recorded the transaction.

5. Emeril paid $2,000 rent on December 1 for the 4 months starting December 1.

6. Emeril received cash for future services and recorded a liability until the revenue was earned.

7. Emeril performed consulting services for a client in December 2010. On December 31, it billed the client $1,200.

8. Emeril paid cash for an expense and recorded an asset until the item was used up.

9. Emeril purchased $900 of supplies in 2010; at year-end, $400 of supplies remain unused.

10. Emeril purchased equipment on January 1, 2010; the equipment will be used for 5 years.

11. Emeril borrowed $10,000 on October 1, 2010, signing an 8% one-year note payable.

Instructions

Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense, accrued revenue) is needed in each situation, at December 31, 2010.

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Exercise 3-3

Conan Industries collected $100,000 from customers in 2010. Of the amount collected, $25,000 was from revenue earned on account in 2009. In addition, Conan earned $40,000 of revenue in 2010, which will not be collected until 2011.

Conan Industries also paid $70,000 for expenses in 2010. Of the amount paid, $30,000 was for expenses incurred on account in 2009. In addition, Conan incurred $42,000 of expenses in 2010,

which will not be paid until 2011.

Instructions

(a) Compute 2010 cash-basis net income.

(b) Compute 2010 accrual-basis net income.

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Breif Exercise 3-11

Duncan Company records all prepayments in income statement accounts.At April 30, the trial balance shows Supplies Expense $2,800, Service Revenue $9,200, and zero balances in related balance sheet accounts. Prepare the adjusting entries at April 30 assuming (a) $1,000 of supplies on hand and (b) $3,000 of service revenue should be reported as unearned.

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Breif Exercise 3-9 & 10

The adjusted trial balance of Harmony Company at December 31, 2010, includes the following accounts: S. Harmony, Capital $15,600; S. Harmony, Drawing $6,000; Service Revenue $35,400; Salaries Expense $16,000; Insurance Expense $2,000; Rent Expense $4,000; Supplies Expense $1,500; and Depreciation Expense $1,300. Prepare an income statement for the year.

3-10

Partial adjusted trial balance data for Harmony Company is presented in BE3-9. The balance in S. Harmony, Capital is the balance as of January 1. Prepare an owner’s equity statement for the year assuming net income is $10,600 for the year

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Breif Exercise 3-8

The trial balance of Bair Company includes the following balance sheet accounts. Identify the accounts that may require adjustment. For each account that requires adjustment, indicate (a) the type of adjusting entry (prepaid expenses, unearned revenues, accrued revenues, and accrued expenses) and (b) the related account in the adjusting entry.

Accounts Receivable                           Interest Payable

Prepaid Insurance                               Unearned Service Revenue

Accumulated Depreciation—Equipment

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Breif Exercise 3-7

The bookkeeper for Oglesby Company asks you to prepare the following accrued adjusting entries at December 31.

1. Interest on notes payable of $400 is accrued.

2. Services provided but not recorded total $1,500.

3. Salaries earned by employees of $900 have not been recorded.

Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries Expense, and Salaries Payable.

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Breif Exercise 3-6

Using the data in BE3-5, journalize and post the entry on July 1 and the adjusting entry on December 31 for Randle Insurance Co. Randle uses the accounts Unearned Insurance Revenue and Insurance Revenue.

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Breif Exercise 3-5

On July 1, 2010, Spahn Co. pays $18,000 to Randle Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Spahn Co., journalize and post the entry on July 1 and the adjusting entry on December 31.

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Breif Exercise 3-4

At the end of its first year, the trial balance of Denton Company shows Equipment $30,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is estimated to be $5,000. Prepare the adjusting entry for depreciation at December 31, post the adjustments to T accounts, and indicate the balance sheet presentation of the equipment at December 31.

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Breif Exercise 3-3

Windsor Advertising Company’s trial balance at December 31 shows Advertising Supplies $6,700 and Advertising Supplies Expense $0. On December 31, there are $2,700 of supplies on hand. Prepare the adjusting entry at December 31, and using T accounts, enter the balances in the accounts, post the adjusting entry, and indicate the adjusted balance in each account.

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Breif Exercise 3-2

Nunez Company accumulates the following adjustment data at December 31.

Indicate

(a) The type of adjustment (prepaid expense, accrued revenues and so on), and (b) the status of accounts before adjustment (overstated or understated).

1. Supplies of $100 are on hand.

2. Services provided but not recorded total $900.

3. Interest of $200 has accumulated on a note payable.

4. Rent collected in advance totaling $800 has been earned.

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Problem 2-5B

The Quinn Theater, owned by Mike Quinn, will begin operations in March.The Quinn will be unique in that it will show only triple features of sequential theme movies. As of March 1, the ledger of Quinn showed:No. 101 Cash $16,000;No. 140 Land $42,000;No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $18,000; No. 157 Equipment $16,000; No. 201 Accounts Payable $12,000; and No. 311 Common Stock $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 Return of the Jedi) to be shown for the first 3 weeks of March. The film rental was $6,000; $3,000 was paid in cash and $3,000 will be paid on March 10.

3 Ordered the first three Star Trek movies to be shown the last 10 days of March. It willcost $300 per night.

9 Received $6,500 cash from admissions.

10 Paid balance due on Star Wars movies rental and $4,000 on March 1 accounts payable.

11 Quinn 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 Quinn Theater of $800 ($8,000 10%) for March. Brewer paid one-half the balance due and will remit the remainder on April 5.

31 Received $11,000 cash from customers for admissions.

In addition to the accounts identified above, the chart of accounts includes: No. 112 Accounts Receivable, No. 405 Admission 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 (✓) in the reference column of the ledger for the beginning balance.
(b) Journalize the March transactions.
(c) Post the March journal entries to the ledger. Assume that all entries are posted from page 1of the journal.
(d) Prepare a trial balance on March 31, 2008

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Problem 2-5A


The Lake Theater opened on April 1.All facilities were completed on March 31.At this time, the ledger showed: No. 101 Cash $6,000, No. 140 Land $10,000, No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $8,000, No. 157 Equipment $6,000, No. 201 Accounts Payable $2,000, No. 275 Mortgage Payable $8,000, and No. 311 Share Capital— Ordinary $20,000. During April, the following events and transactions occurred.

Apr.   2 Paid film rental of $800 on first movie.

3 Ordered two additional films at $1,000 each.

9 Received $2,800 cash from admissions.

10 Made $2,000 payment on mortgage and $1,000 for accounts payable due.

11 Lake Theater contracted with R.Wynns Company to operate the concession stand. Wynns is to pay 17% of gross concession receipts (payable monthly) for the right to operate the concession stand.

12 Paid advertising expenses $500.

20 Received one of the films ordered on April 3 and was billed $1,000. The film will be shown in April.

25 Received $5,200 cash from admissions.

29 Paid salaries $2,000.

30 Received statement from R.Wynns showing gross concession receipts of $1,000 and the balance due to The Lake Theater of $170 ($1,000 17%) for April.Wynns paid one-half of the balance due and will remit the remainder on May 5.

30 Prepaid $900 rental on special film to be run in May.

In addition to the accounts identified above, the chart of accounts shows: No. 112 Accounts Receivable, No. 136 Prepaid Rentals, No. 405 Admission 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 as of April 1. Insert a check mark (✓) in the reference column of the ledger for the beginning balance.

(b) Journalize the April transactions.

(c) Post the April journal entries to the ledger. Assume that all entries are posted from page 1 of the journal.

(d) Prepare a trial balance on April 30, 2011.

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Problem 2-4B

The trial balance of Don Kelso Co. shown below does not balance.


Each of the listed accounts 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 account was debited for $470, and Accounts Receivable was credited for the same amount.The actual collection was for $740.

2. The purchase of a printer on account for $340 was recorded as a debit to Supplies for $340 and a credit to Accounts Payable for $340.

3. Services were performed on account for a client for $890. Accounts Receivable was debited for $890, and Service Revenue was credited for $89.

4. A debit posting to Salaries Expense of $600 was omitted.

5. A payment of a balance due for $206 was credited to Cash for $206 and credited to Accounts Payable for $260.

6. The payment of a $500 cash dividend was debited to Salaries Expense for $500 and credited to Cash for $500.

Instructions
Prepare a correct trial balance. (Hint: It helps to prepare the correct journal entry for the transaction described and compare it to the mistake made).

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Problem 2-4A

The trial balance of the Sterling Company shown below does not balance.

                        STERLING COMPANY

                             Trial Balance

                           May 31, 2008

                                       Debit       Credit

Cash                                $5,850

Accounts Rcvbl                                 $2,750

Prepaid Insurance                  700

Equipment                          8,000

Accounts Payable                               4,500

Property Taxes Payable           560

Common Stock                                 11,700

Service Revenue                   6,690

Salaries Revenue                  4,200

Advertising Expense                            1,100

Property Tax Expense               800

                                       $26,800     $20,050

Your review of the ledger reveals that each account has a normal balance. You also discover the following errors.

  (a) The totals of the debit sides of Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated $100.

  (b) Transposition errors were made in Accounts Receivable and Service Revenue. Based on postings made, the correct balances were $2,570 and $6,960, respectively.

  (c) A debit posting to Salaries Expense of $200 was omitted.

  (d) A $1,000 cash dividend was debited to Common Stock for $1,000 and credited to Cash for $1,000.

  (e) A $520 purchase of supplies on account was debited to Equipment for $520 and credited to Cash for $520.

  (f) A cash payment of $450 for advertising was debited to Advertising Expense for $45 and credited to Cash for $45.

  (g) A collection from a customer for $210 was debited to Cash for $210 and credited to Accounts Payable for $210.

Instructions: 

Prepare a correct trial balance. Note that the chart of accounts includes the following: Dividends, and Supplies. (Hint: It helps to prepare the correct journal entry for the transaction described and compare it to the mistake made.)

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Problem 2-3B

locombe Services was formed on May 1, 2008. The following transactions took place during the first month.

Transactions on May 1:

1. Stockholders invested $100,000 cash in the company in exchange for common stock.

2. Hired two employees to work in the warehouse.They will each be paid a salary of $3,000 per month.

3. Signed a 2-year rental agreement on a warehouse; paid $36,000 cash in 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. Transactions during the remainder of the month:

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—$10,000 cash and $20,000 on account.

9. Paid $800 to suppliers for accounts payable due.

10. Received $5,000 from customers in 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, 2008. 

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Problem 2-2B

Rosa Perez is a licensed architect. During the first month of the operation of her business, the following events and transactions occurred.

April 1 Stockholders invested $30,000 cash in exchange for common stock.

1 Hired a secretary-receptionist at a salary of $500 per week payable monthly.

2 Paid office rent for the month $800.

3 Purchased architectural supplies on account from Halo Company $1,500.

10 Completed blueprints on a carport and billed client $1,200 for services.

11 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 $2,000.

30 Paid $600 to Halo Company for accounts payable due.

Rosa 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. 311 Common Stock, No. 400 Service Revenue, No. 726 Salaries Expense, and No. 729 Rent Expense.

Instructions

(a) Journalize the transactions.
(b) Post to the ledger accounts.
(c) Prepare a trial balance on April 30, 2008.

http://studentoffortune.com/question/1638660/Rosa-Perez-is-a-licensed-architect-During-the-first-month-of-the-operation-of-her-business-the

Problem 2-2A

Jane Kent is a licensed accountant. During the first month of operations of her business, Jane Kent, Accountant, the following events and transactions occurred.

May   1 Shareholders invested €25,000 cash in exchange for ordinary shares.

          2 Hired a secretary-receptionist at a salary of €2,000 per month.

          3 Purchased €2,500 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. Arnold Co.

31 Paid secretary-receptionist €2,000 salary for the month.

31 Paid 40% of balance due Read Supply Company.

Jane uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Revenue, No. 311 Share Capital— Ordinary, No. 400 Service Revenue, No. 726 Salaries Expense, and No. 729 Rent Expense.

Instructions

(a) Journalize the transactions.

(b) Post to the ledger accounts.

(c) Prepare a trial balance on May 31, 2011.

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Problem 2-1B

Surepar Miniature Golf and Driving Range was opened on March 1 by Jerry Glover. The following selected events and transactions occurred during March:

March 1 Invested $50,000 cash in the business in exchange for common stock.

3 Purchased Lee’s Golf Land for $38,000 cash.The price consists of land $23,000, building $9,000, and equipment $6,000. (Make one compound entry.)

5 Advertised the opening of the driving range and miniature golf course, paying advertising expenses of $1,600.

6 Paid cash $1,480 for a one-year insurance policy.

10 Purchased golf clubs and other equipment for $2,600 from Palmer Company payable in 30 days.

18 Received $800 in cash for golf fees earned.

19 Sold 100 coupon books 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 Palmer Company in full.

31 Received $500 cash for fees earned.

Jerry Glover uses the following accounts: Cash; Prepaid Insurance; Land; Buildings; Equipment; Accounts Payable; Unearned Revenue; Common Stock; Dividends; Golf Revenue; Advertising Expense; and Salaries Expense.

Instructions

Journalize the March transactions.

Instructions 

Journalize the March transactions. 

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Problem 2-1A

Frontier Park was started on April 1 by C. J. Mendez and associates. The following

selected events and transactions occurred during April.

Apr. 1 Shareholders invested $40,000 cash in the business in exchange for ordinary shares.

       4 Purchased land costing $30,000 for cash.

       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 $1,500 cash for a one-year insurance policy.

       17 Declared and paid a $1,000 cash dividend.

       20 Received $5,700 in cash for admission fees.

       25 Sold 100 coupon books for $25 each. Each book contains 10 coupons that  entitle the holder to one admission to the park.

       30 Received $8,900 in cash admission fees.

       30 Paid $900 on balance owed for advertising incurred on April 8.

Mendez uses the following accounts: Cash, Prepaid Insurance, Land, Accounts Payable, Unearned Admission Revenue, Share Capital—Ordinary; Dividends; Admission Revenue, Advertising Expense, and Salaries Expense.

Instructions

Journalize the April transactions.

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Exercise 2-14

The accounts in the ledger of Sanford Delivery Service contain the following balances on July 31, 2011.

Accounts Receivable £ 7,642                          Prepaid Insurance £ 1,968

Accounts Payable 8,396                                  Repair Expense 961

Cash ?                                                              Service Revenue 10,610

Delivery Equipment 49,360                             Dividends 700

Gas and Oil Expense 758                                Share Capital—Ordinary 40,000

Insurance Expense 523                                   Salaries Expense 4,428

Notes Payable 18,450                                     Salaries Payable 815

                                                                        Retained Earnings 4,636

Instructions

Prepare a trial balance with the accounts arranged as illustrated in the chapter and fill in the missing amount for Cash.

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Exercise 2-13 


The bookkeeper for Sam Kaplin Equipment Repair made a number of errors in journalizing and posting, as described below.

1. A credit posting of $400 to Accounts Receivable was omitted.
2. A debit posting of $750 for Prepaid Insurance was debited to Insurance Expense.
3. A collection from a customer of $100 in payment of its account owed was journalized and posted as a debit to Cash $100 and a credit to Service Revenue $100.
4. A credit posting of $300 to Property Taxes Payable was made twice.
5. A cash purchase of supplies for $250 was journalized and posted as a debit to Supplies $25 and a credit to Cash $25.
6. A debit of $475 to Advertising Expense was posted as $457.

Instructions: For each error:
(a) Indicate whether the trial balance will balance.
(b) If the trial balance will not balance, indicate the amount of the difference.
(c) Indicate the trial balance column that will have the larger total.
Consider each error separately. Use the following form, in which error (1) is given as an example. 


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Exercise 2-12

Selected transactions for Tina Cordero Company during its first month in business are presented below.

Sept. 1 Invested €10,000 cash in the business in exchange for ordinary shares.

         5 Purchased equipment for €12,000 paying €5,000 in cash and the balance on account.

         25 Paid €3,000 cash on balance owed for equipment.

         30 Declared and paid a €500 cash dividend.

Cordero’s chart of accounts shows: No. 101 Cash, No. 157 Equipment, No. 201 Accounts Payable, No. 311 Share Capital—Ordinary; No. 332 Dividends.

Instructions

(a) Journalize the transactions on page J1 of the journal. (Omit explanations.)

(b) Post the transactions using the standard account form.

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Exercise 2-11

Presented below is the ledger for Heerey Co.

Cash	No. 101
10/1	5,000	10/4	400
10/10	650	10/12	1,500
10/10	4,000	10/15	250
10/20	500	10/30	300
10/25	2,000	10/31	500

Accounts Receivable	No. 112
10/6	800	10/20	500
10/20	940

Supplies	No. 126
10/4	400

Furniture	No. 149
10/3	2,000

Notes Payable	No. 200
		10/10	4,000

Accounts Payable	No. 201
10/12	1,500	10/3	2,000

Heerey, Capital	No. 301
		10/1	5,000
		10/25	2,000

Service Revenue	No. 407
		10/6	800
		10/10	650
		10/20	940

Heerey, Drawing	No. 306
10/30	300

Store Wages Expense	No. 628
10/31	500

Rent Expense	No. 729
10/15	250

Instructions

(a) Reproduce the journal entries for the transactions that occurred on Oct 1, 10, and 20.

(b) Determine the October 31 balance for each of the accounts above, and complete the trial balance at October 31, 2010. (If answer is zero, please enter 0. Do not leave any fields blank.)

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