BUS312A/612A Financial Reporting I. Homework & The Accounting Cycle Review Chapter 3

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1 BUS312A/612A Financial Reporting I Homework & The Accounting Cycle Review Chapter 3

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4 E3-1 (Transaction Analysis-Service Company) During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. Instructions Journalize the transactions in the general journal. April 2 Invested $32,000 cash and equipment valued at $14,000 in the business. 2 Hired a secretary-receptionist at a salary of $290 per week payable monthly. 3 Purchased supplies on account $700. (Debit an asset account.) 7 Paid office rent of $600 for the month. 11 Completed a tax assignment and billed client $1,100 for services rendered. (Use Service Rev)

5 E3-1 (Transaction Analysis-Service Company) During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. April 12 Received $3,200 advance on a management consulting engagement. 17 Received cash of $2,300 for services completed for Ferengi Co. 21 Paid insurance expense $ Paid secretary-receptionist $1,160 for the month. 30 A count of supplies indicated that $120 of supplies had been used. 30 Purchased a new computer for $6,100 with personal funds. (The computer will be used exclusively for business purposes.)

6 E3-17 March transactions: March 1 Invested $50,000 cash for common stock 3 Purchased real estate for $38,000 cash (land $10,000, building 22,000, equipment 6,000) 5 Paid $1,600 to advertise the driving range & golf course 6 Paid $1,480 for a one-year insurance policy 10 Purchased golf equipment for $2,500 from Singh Company, payable in 30 days

7 E3-17 March transactions: March18 Received golf fees of $1,200 in cash 25 Declared and paid a $500 cash dividend 30 Paid wages of $ Paid Singh Company in full 31 Received $750 in cash for golf fees.

8 Adjusting & Reversing Entries: 4 Kinds

9 Adjusting & Reversing Entries: 4 Kinds

10 E3-6 (Adjusting Entries) Karen Weller, D.D.S., opened a dental practice on January 1, During the first month of operations the following transactions occurred. 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. 1. Performed services for patients who had dental plan insurance. At January 31, $750 of such services was earned but not yet billed to the insurance companies. 2. Utility expenses incurred but not paid prior to January 31 totaled $ 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.

11 E3-6 (Adjusting Entries) Karen Weller, D.D.S., opened a dental practice on January 1, During the first month of operations the following transactions occurred. 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. 4. Purchased a one-year malpractice insurance policy on January 1 for $12, Purchased $1,600 of dental supplies. On January 31, determined that $500 of supplies were on hand.

12 E3-10 (Adjusting Entries) Greco Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows. Cash $ 19,600 Prepaid Insurance 4,500 Supplies 2,600 Land 20,000 Buildings 120,000 Equipment 16,000 Accounts Payable $ 4,500 Unearned Rent Revenue 4,600 Mortgage Payable 60,000 Common Stock 91,000 Retained Earnings 9,000 Dividends 5,000 Rent Revenue 76,200 Salaries and Wages Expense 44,800 Utilities Expenses 9,200 Maintenance and Repairs Expense 3,600 $245,300 $245,300 Adjusting entries: 1. The balance in prepaid insurance is a one-year premium paid on June 1, An inventory count on August 31 shows $450 of supplies on hand. 3. Annual depreciation rates are cottages (4%) and furniture (10%). Salvage value is estimated to be 10% of cost. 4. Unearned Rent Revenue of $3,800 was earned prior to August Salaries of $375 were unpaid at August Rentals of $800 were due from tenants at August The mortgage interest rate is 8% per year.

13 Adjusted Trial Balance-Greco Resorts--WORKSHEET Cash $ 19,600 Prepaid Insurance 4,500 Supplies 2,600 Land 20,000 Buildings 120,000 Equipment 16,000 Accounts Payable $ 4,500 Unearned Rent Revenue 4,600 Mortgage Payable 60,000 Common Stock 91,000 Retained Earnings 9,000 Dividends 5,000 Rent Revenue 76,200 Salaries and Wages Expense 44,800 Utilities Expenses 9,200 Maintenance and Repairs Expense 3,600 Insurance Expense Supplies Expense Depreciation Expense-Building Depreciation Expense-Equipment Interest Expense $245,300 $245,300

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15 4 Closing Entries: Income Statement and Dividend Accounts

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17 2 Closing Entries: Income Statement and Dividend Accounts

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20 E3-16 Closing Entries for a Corporation Ending Inventory $60,000 Common Stock 75,000 Retained Earnings 45,000 Dividends 18,000 Sales Returns & Allowances 12,000 Sales Discounts 15,000 Sales Revenue 410,000 Cost of Goods Sold 225,700 Selling Expenses 16,000 Administrative Expenses 38,000 Income Tax Expense 30,000

TRANSACTIONS ANALYSIS EXAMPLE. Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations:

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