ACC231 A. T. Still University Week 4 Case Study Workbook

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This is your weekly case study. Complete using the Excel template provided for you here.

Week 4 Case Study = CH 4 CS-1 on Workbook pp 162-167

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ACC 231 CH 4 Case Study CS-1 on workbook pp 162-167 NAME Part a - complete the account listing Account Name Accounts Payable Accounts Receivable Cash Equipment Mawani, Capital Mawani, Withdrawals Notes Payable Office Supplies Prepaid Insurance Insurance Expense Rent Expense Salaries Expense Service Revenue Unearned Revenue Utilities Expense Total $ $ $ $ Balance Account Category 6,900 liabilties 5,400 2,200 11,600 $ $ $ 12,500 - $ $ 200 - $ $ $ - $ $ $ - Debit $ Credit 6,900 $ 6,900 - Part b - identify the accounting cycle steps prior to the trial balance $ - ACC 231 CH 4 Case Study CS-1 on workbook pp 162-167 Part c - Prepare journal entries for March JOURNAL Date 3/2/2018 3/3/2018 3/4/2018 3/6/2018 3/8/2018 3/10/2018 3/13/2018 3/15/2018 3/16/2018 3/20/2018 Account Title and Explanation Rent Expense Cash Paid March office rent PR 540 101 Page 1 Credit Debit $ 2,000 $ 2,000 3/23/2018 3/29/2018 #1 3/29/2018 #2 3/30/2018 3/31/2018 Hint: make sure each journal entry balance with the same amount on the left and same amount on the right Hint: make sure your debit is first followed by your credit ACC 231 CH 4 Case Study CS-1 on workbook pp 162-167 Part c - Post to the ledger accounts Account: Date Beginning 3/2/18 Cash Account: Date Beginning Accounts Receivable Description Account: Date Beginning Prepaid Insurance Description Account: Date Beginning Office Supplies Description Account: Date Beginning Equipment Account: Date Beginning Accounts Payable Description Description PR DR J1 Description PR PR PR PR PR $ DR DR DR DR DR GL No: 101 Balance $ 2,200 DB 2,000 $ 200 DB CR CR GL No: 105 Balance CR GL No: 110 Balance CR GL No: 115 Balance CR GL No: 120 Balance CR GL No: 200 Balance Account: Date Beginning Unearned Revenue Description CR GL No: 210 Balance Account: Date Beginning Notes Payable Description DR CR GL No: 215 Balance PR Account: Date Beginning Mawani, Capital Description PR DR CR GL No: 300 Balance Account: Date Mawani, Withdrawals Description PR DR CR GL No: 310 Balance Account: Date Service Revenue Description PR DR CR GL No: 400 Balance Account: Date Rent Expense Description PR DR CR GL No: 540 Balance Account: Date Utilities Expense Description PR DR CR GL No: 550 Balance Account: Date Salaries Expense Description CR GL No: 560 Balance PR PR DR DR Hint: don't forget the beginning balances! Hint: some people like to print off the journal entries on paper and check off each item as you post it in here to the ledger accounts. Printing helps! Hint: don't forget the DB or CR for each line ACC 231 CH 4 Case Study CS-1 on workbook pp 162-167 Part d - complete the Trial Balance Mawani Interiors Trial Balance As of March 31, 2018 Account Titles Cash Accounts Receivable Prepaid Insurance Office Supplies Equipment Accounts Payable Unearned Revenue Notes Payable Mawani, Capital Mawani, Withdrawals Service Revenue Rent Expense Utilities Expense Salaries Expense Total Debit Part e - discuss the ethical ramifications of eliminating the journal Credit $0 $0 Hint: you will know you've got it, if your ending DEBIT balance equals your ending CREDIT balance Hint: make sure to complete all 5 parts of this case Chapter 4 The Accounting Cycle: Journals and Ledgers learning OBJECTIVES LO 1 Distinguish between debits and credits LO 5 Post journal entries to the general ledger  LO 2 Describe the accounting cycle LO 6 Prepare a trial balance LO 3 Explain how to analyze a transaction LO 7 LO 4 Record transactions in the general journal   escribe ethics and internal controls relating to D recording and posting transactions Access ameengage.com for integrated resources including tutorials, practice exercises, the digital textbook and more. Assessment Questions AS-1 LO 1 What does the term debit refer to? AS-2 LO 1 True or False: A credit will always be an increase to any account. AS-3 LO 1 Which three types of accounts use the debit side of the T-account to increase their value? AS-4 LO 1 Which three types of accounts use the credit side of the T-account to increase their value? AS-5 LO 1 What is the normal balance of an asset? 121 Chapter 4 AS-6 The Accounting Cycle: Journals and Ledgers LO 1 What is the normal balance of a liability? AS-7 LO 5 Explain the purpose of a chart of accounts. AS-8 LO 2 3 4 5 6 List and describe the first four steps of the accounting cycle. AS-9 LO 4 In the accounting cycle, what is the purpose of creating journals? AS-10 LO 5 In the accounting cycle, what is the purpose of the general ledger? AS-11 LO 6 In the accounting cycle, what is the purpose of the trial balance? AS-12 LO 4 In the journal, what information is entered in the PR (posting reference) column? 122 The Accounting Cycle: Journals and Ledgers AS-13 Chapter 4 LO 5 What is the relationship between the closing balance and the opening balance for an asset? AS-14 LO 6 If the trial balance balances, were all transactions correctly recorded? Explain. AS-15 LO 6 If an error is found in a journal entry that has already been prepared and posted to the general ledger, how should the error be corrected? AS-16 LO 7 Does using a computerized accounting information system automatically mean that accounting information is reliable and accurate? Explain. 123 Chapter 4 The Accounting Cycle: Journals and Ledgers Application Questions Group A AP-1A LO 1 3 Esteem Fitness provides fitness services for its customers. During June 2018, Esteem Fitness had the following transactions. Jun Jun Jun Jun Jun Jun Jun 1 3 6 10 15 20 26 Sold one-month memberships to customers for $4,500 on account Received a telephone bill for $250, which will be paid next month Paid an employee’s salary of $1,200 Received $3,000 cash from customers paying in advance for upcoming one-year memberships Paid $6,000 cash in advance for six months of rent Received a $10,000 loan from the bank Purchased equipment with $8,000 cash Complete the table to analyze each transaction. Account Name Category Increase or Decrease Debit or Credit Jun 1 Jun 3 Jun 6 Jun 10 Jun 15 Jun 20 Jun 26 AP-2A LO 1 3 Have-a-Bash, owned by Finn Tymes, provides party planning services. During October 2018, Have-a-Bash had the following transactions. Oct 1 Finn invested $5,000 cash into the business Oct 2 Planned a party for a customer and received $900 cash Oct 4 Received a $500 utilities bill, which will be paid later Oct 10 Paid $200 cash for maintenance for the month Oct 12 Paid $400 towards the bank loan principal Oct 18 Received cash from a customer who owed $1,100 Oct 22 Paid the utilities bill received earlier Oct 28 Paid $3,000 cash in advance for office rent Complete the table to analyze each transaction. 124 The Accounting Cycle: Journals and Ledgers Account Name Chapter 4 Category Increase or Decrease Debit or Credit Oct 1 Oct 2 Oct 4 Oct 10 Oct 12 Oct 18 Oct 22 Oct 28 AP-3A LO 1 For the following list of accounts, indicate which side of the T-account causes an increase or decrease. The first account has been done for you. Account Title Cash Debit Credit Increase Decrease Advertising Expense Service Revenue Unearned Revenue Accounts Receivable Accounts Payable Owner’s Capital Owner’s Withdrawals Prepaid Rent Rent Expense AP-4A LO 3 4 Kick-off Sports Training helps train children in various sporting activities. During May 2018, the following transactions took place. May May May May May May May May 3 3 4 4 10 10 11 15 Received a maintenance bill for $500, which will be paid next month Received $2,750 cash for training services provided Borrowed $4,000 cash from the bank Received $220 from a customer who owed money on training services already provided Prepaid $1,200 cash for insurance for one year Paid telephone expenses of $150 for the month with cash Paid $700 cash to reduce the amount owed to a supplier Paid $25 interest on the bank loan Prepare the journal entries for the transactions. 125 Chapter 4 The Accounting Cycle: Journals and Ledgers Date AP-5A Account Title and Explanation PR Debit Credit LO 3 4 Rejuvenation Spa is a sole proprietorship owned by Claire Sawyer. During the month of July 2018, the following transactions took place. July 3 Provided services to a customer on account worth $3,600 July 4 Borrowed $2,000 cash from the bank July 6 Provided services to a customer and received $2,400 in cash July 10 Received a telephone bill for $250, which will be paid later July 11 Paid $600 cash to reduce the amount owed to a supplier July 15 Collected $1,800 cash from customers owing on account July 20 Paid the telephone bill from July 10 July 21 Paid a portion of the bank loan principal with $1,500 cash July 31 Paid salaries for the month with $1,600 cash July 31 Purchased equipment for $1,900, which will be paid later Prepare the journal entries for the above transactions. 126 The Accounting Cycle: Journals and Ledgers Date Account Title and Explanation Chapter 4 PR Debit Credit 127 Chapter 4 AP-6A The Accounting Cycle: Journals and Ledgers LO 3 4 Noel Dy opened an automobile repair shop. The following transactions occurred during the month of March 2018. Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar 1 3 5 7 8 15 18 19 20 29 31 31 Noel Dy invested $10,000 cash and $8,000 worth of equipment in the business Paid $1,000 cash to rent the shop space Purchased $1,200 worth of shop tools using cash Received $2,000 cash for repair work done for MJ Gonzales Purchased $1,000 worth of shop tools from Adrian Cruz on account Paid half of the amount due to Adrian Cruz with cash Paid $200 cash to a local publication for advertising Paid salaries with $1,000 in cash Noel Dy withdrew $1,500 cash for personal use Bought $1,000 worth of chairs and tables for the shop on account Noel Dy personally invested additional equipment worth $5,000 for business use Received $3,000 cash from various customers for repairs done on their automobiles Prepare journal entries for the above transactions. Date 128 Account Title and Explanation PR Debit Credit The Accounting Cycle: Journals and Ledgers Date AP-7A LO Chapter 4 Account Title and Explanation PR Debit Credit 3 4 5 6 Thomas Topology provides surveying services to construction companies and municipalities. The company is owned and operated by Thomas Edwards. The closing balances at the end of March 2018 and the chart of accounts are shown below. Thomas Topology Balance Sheet As at March 31, 2018 Assets Cash Liabilities $22,000 Accounts Payable $10,500 Accounts Receivable 9,000 Unearned Revenue 4,500 Equipment 8,000 Notes Payable 6,000 Total Liabilities 21,000 Owner’s Equity Edwards, Capital Total Assets $39,000 Total Liabilities and Owner’s Equity 18,000 $39,000 129 Chapter 4 The Accounting Cycle: Journals and Ledgers Account Description Account # ASSETS Account Description Account # REVENUE Cash Accounts Receivable Prepaid Insurance Equipment 101 105 110 120 LIABILITIES 400 Service Revenue EXPENSES 515 520 540 545 550 555 Insurance Expense Interest Expense Rent Expense Accounts Payable Unearned Revenue Notes Payable 200 210 215 Salaries Expense Telephone Expense Travel Expense OWNER’S EQUITY Edwards, Capital Edwards, Withdrawals 300 310 During the month of April, Thomas Topology had the following transactions. Apr 1 Purchased office equipment on account worth $7,000 Apr 2 Received $25,000 cash for services provided Apr 3 Paid $1,000 cash for April's rent Apr 4 Prepaid $1,200 for insurance for one year Apr 10 Paid $200 cash to reduce the balance of accounts payable Apr 14 Paid $8,000 cash for employee's salaries Apr 22 Received a telephone bill for $250, which will be paid next month Apr 24 Recorded travel expenses for $8,000 to be paid next month Apr 30 Paid $4,550 to bank for the bank loan principal and interest; interest was $50 and the remainder was principal Required a) Prepare the journal entries for the month of April. Date 130 Account Title and Explanation PR Debit Credit The Accounting Cycle: Journals and Ledgers Date Chapter 4 Account Title and Explanation PR Debit Credit b) Post the journal entries to the ledger accounts. Account: Date Description PR DR CR GL No: Balance Account: Date Description PR DR CR GL No: Balance CR GL No: Balance Account: Date Description PR DR 131 Chapter 4 The Accounting Cycle: Journals and Ledgers Account: Date GL No: Description PR DR CR Description PR DR CR Account: Date GL No: Account: Date Description PR DR CR Description PR DR CR 132 Balance GL No: Description PR DR CR Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance Balance GL No: Description PR DR CR Balance The Accounting Cycle: Journals and Ledgers Chapter 4 Account: Date GL No: Description PR DR CR Account: Date GL No: Description PR DR CR Account: Date Description PR DR CR Description PR DR CR Description PR DR CR Balance GL No: Description PR DR CR Description PR DR CR Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance Balance GL No: Balance 133 Chapter 4 c) The Accounting Cycle: Journals and Ledgers Prepare a trial balance at the end of April. AP-8A LO 3 4 5 6 High Flying Biplane provides sightseeing tours in vintage biplanes. The company is owned by Sky Bridges. The closing balances at the end of May 2018 and the chart of accounts are shown below. Assets Cash Accounts Receivable Prepaid Insurance Equipment Total Assets Account Description High Flying Biplane Balance Sheet As at May 31, 2018 Liabilities $8,000 Accounts Payable 6,000 Unearned Revenue 1,200 Notes Payable 60,000 Total Liabilities Owner’s Equity Bridges, Capital $75,200 Total Liabilities and Owner’s Equity Account # ASSETS Cash Accounts Receivable Prepaid Insurance Equipment Interest Payable Unearned Revenue Notes Payable 101 105 110 120 Bridges, Withdrawals 134 Service Revenue 300 310 400 EXPENSES Advertising Expense Insurance Expense Interest Expense 200 205 210 215 OWNER’S EQUITY Bridges, Capital Account # REVENUE LIABILITIES Accounts Payable Account Description Telephone Expense 500 515 520 550 $8,200 3,200 20,000 31,400 43,800 $75,200 The Accounting Cycle: Journals and Ledgers Chapter 4 During the month of June, High Flying Biplane had the following transactions. Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun 1 2 3 4 10 14 20 22 24 30 The owner invested $5,000 cash into the business Received $1,500 cash for tours that will be provided in August Received an advertising bill for $400, which will be paid next month Paid the telephone bill with $200 cash Provided tours worth $2,400 to a customer who will pay next month Purchased equipment with $4,000 cash Received payments totaling $1,600 from customers paying their accounts Paid $900 towards accounts payable Paid $1,000 towards the bank loan principal The owner withdrew $1,200 cash for personal use Required a) Prepare the journal entries for the month of June. Date Account Title and Explanation PR Debit Credit 135 Chapter 4 The Accounting Cycle: Journals and Ledgers b) Post the journal entries to the ledger accounts. Account: Date Description PR DR CR GL No: Balance Account: Date Description PR DR CR GL No: Balance Account: Date Description PR DR CR GL No: Balance CR GL No: Balance Account: Date Description PR DR Account: Date 136 GL No: Description PR DR CR Balance The Accounting Cycle: Journals and Ledgers Account: Date Description Chapter 4 PR DR CR Account: Date GL No: Description PR DR CR Description PR DR CR Account: Date Description PR DR CR Description PR DR CR Balance GL No: Description PR DR CR Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance GL No: Account: Date GL No: Balance Balance GL No: Description PR DR CR Balance 137 Chapter 4 The Accounting Cycle: Journals and Ledgers Account: Date GL No: Description PR DR CR Account: Date GL No: Description PR DR CR Account: Date c) Balance GL No: Description Prepare a trial balance at the end of June. 138 Balance PR DR CR Balance The Accounting Cycle: Journals and Ledgers AP-9A Chapter 4 LO 6 Micro Company, owned by Steven Upton, showed these accounts and their corresponding normal balances on May 31, 2018. Account Title Upton, Capital Insurance Expense Balance $23,500 900 Accounts Payable 15,500 Service Revenue 8,900 Equipment 34,500 Supplies Expense 3,000 Cash 6,400 Salaries Expense 4,000 Rent Expense 3,000 Upton, Withdrawals 3,000 Utilities Expense 1,300 Notes Payable Prepaid Insurance 10,200 2,000 Prepare Micro Company’s trial balance at May 31, 2018. 139 Chapter 4 AP-10A The Accounting Cycle: Journals and Ledgers LO 6 Home Circus is owned by Laura Roberts and provides acrobatic entertainment at children’s parties and other events. Its complete general ledger for March 2018 is shown below. Account: Cash Date Mar 1 GL No: 101 Description PR DR CR Balance Opening Balance 7,800 DR Mar 1 J1 1,800 Mar 2 J1 Mar 3 J1 1,440 7,460 DR Mar 10 J1 10 7,450 DR Mar 10 J1 780 6,670 DR Mar 20 J1 2,600 9,270 DR Mar 22 J1 800 10,070 DR Mar 24 J1 710 9,360 DR Mar 31 J1 2,000 7,360 DR 2,900 8,900 DR Account: Accounts Receivable Date Mar 1 Description GL No: 105 PR DR CR Opening Balance J1 800 Account: Prepaid Insurance Mar 1 PR DR CR Opening Balance J1 1,800 1,800 DR Account: Office Supplies GL No: 115 Description PR DR CR Opening Balance J1 250 890 DR Account: Equipment Mar 1 Mar 20 140 Balance 640 DR Mar 4 Date Balance 0 DR Mar 1 Mar 1 1,660 DR GL No: 110 Description Date Balance 2,460 DR Mar 22 Date 6,000 DR GL No: 120 Description PR DR CR Opening Balance Balance 10,500 DR J1 2,600 7,900 DR The Accounting Cycle: Journals and Ledgers Chapter 4 Account: Accounts Payable Date Mar 1 GL No: 200 Description PR DR CR Opening Balance 2,900 CR Mar 4 J1 Mar 24 J1 250 710 Mar 1 GL No: 210 Description PR DR CR Opening Balance Mar 1 GL No: 215 Description PR DR CR Opening Balance J1 780 4,320 CR Account: Roberts, Capital Mar 1 GL No: 300 Description PR DR CR Opening Balance Description Mar 31 GL No: 310 PR DR CR J1 2,000 GL No: 400 Description Mar 2 PR DR J1 CR Balance 2,900 2,900 CR Account: Office Supplies Expense Date Description Mar 10 GL No: 520 PR DR J1 CR 10 Mar 3 Balance 10 DR Account: Rent Expense Date Balance 2,000 DR Account: Service Revenue Date Balance 11,600 CR Account: Roberts, Withdrawals Date Balance 5,100 CR Mar 10 Date Balance 1,800 CR Account: Notes Payable Date 3,150 CR 2,440 CR Account: Unearned Revenue Date Balance GL No: 540 Description PR DR J1 1,440 CR Balance 1,440 DR 141 Chapter 4 The Accounting Cycle: Journals and Ledgers Prepare a trial balance. Place the accounts in the order shown in the general ledger. AP-11A LO 1 6 A part-time bookkeeper for Wombat Tours has created the trial balance at the end of the year and cannot get it to balance. Wombat Tours Trial Balance December 31, 2018 Account Title Accounts Payable Accounts Receivable Advertising Expense Notes Payable Sharpe, Capital Cash Interest Expense Maintenance Expense Office Supplies Sharpe, Withdrawals Prepaid Insurance Equipment Rent Expense Salaries Expense Service Revenue Telephone Expense Unearned Revenue Total DR $3,150 2,350 CR $2,100 5,200 6,170 6,200 560 240 1,600 2,300 1,200 13,500 6,200 5,300 25,800 450 1,680 $40,830 $43,170 All the entries have been journalized and posted to the general ledger properly, and all the accounts should have normal balances. 142 The Accounting Cycle: Journals and Ledgers Chapter 4 Recreate the trial balance for Wombat Tours so that the accounts are listed in the order they would typically appear in a chart of accounts, and ensure that debits equal credits. AP-12A LO 3 4 Greg Carlin is the owner of Carlin Consulting. During the month of April 2018, he had the following transactions. Apr 1 Apr 3 Apr Apr Apr Apr Apr Apr 6 8 17 20 22 28 Greg invested $5,000 cash and equipment valued at $3,000 into the business Provided consulting services to a customer; the customer paid $1,000 now and will pay $1,500 later Received a loan from the bank for $6,000 Paid $1,300 for utilities for the month Purchased equipment with $4,000 cash Paid employee salaries with $2,100 cash Provided consulting services to a customer on account for $1,600 Received the balance owing from the customer on April 3 Record the transactions in the journal. Date Account Title and Explanation PR Debit Credit 143 Chapter 4 The Accounting Cycle: Journals and Ledgers Date AP-13A Account Title and Explanation PR Debit Credit LO 6 On June 23, 2018, the bookkeeper for Henson Company discovered an error in the journal entries. On June 2, equipment was purchased on account for $9,000; however, it was recorded in the journals and ledgers for $90,000. Prepare the entries to correct this error. Date 144 Account Title and Explanation PR Debit Credit The Accounting Cycle: Journals and Ledgers AP-14A Chapter 4 LO 6 On November 22, 2018, the bookkeeper for Fraggle Company discovered an error in the journal entries. On November 16, an entry was made for the cash purchase of office supplies for $550 that incorrectly debited equipment. Prepare the entries to correct this error. Date AP-15A Account Title and Explanation PR Debit Credit LO 7 Xavier works as an accountant for O’Hara Travel Services. He prepared the trial balance at the end of the period and discovered that it did not balance. The total debit balance was significantly larger than the total credit balance. Xavier believes that Mrs. O’Hara, the company’s owner, would be happy if the net income figure was higher so that she can show the lender that the company is very profitable. Therefore, Xavier decides to balance the debit and credit sides by increasing the service revenue account balance, and therefore increasing the credit side of the trial balance. Did Xavier behave in an ethical manner? Explain. 145 Chapter 4 The Accounting Cycle: Journals and Ledgers Application Questions Group B AP-1B LO 1 3 Perfect Party is owned by Candace Rodriguez and provides party planning services. During April 2018, Perfect Party had the following transactions. Apr Apr Apr Apr Apr Apr Apr 1 4 6 8 15 19 27 The owner invested $5,800 cash into the business Planned a party for a customer for $740; the customer will pay later Paid $600 cash for rent for the month Received a $370 telephone bill, which will be paid later Paid $300 towards the bank loan principal Received cash from a customer who owed $840 Paid the telephone bill received earlier Complete the table to analyze each transaction. Account Name Category Increase or Decrease Debit or Credit Apr 1 Apr 4 Apr 6 Apr 8 Apr 15 Apr 19 Apr 27 AP-2B LO 1 3 Bendari Tutoring Services had the following transactions for the month of November 2018. Nov Nov Nov Nov Nov 1 4 9 16 25 Purchased supplies for $100 on account Received $4,200 cash from clients as payment for tutoring Received a telephone bill in the mail for $150 Paid an employee’s salary of $3,500 in cash Collected $500 from clients who owed money for previous services Complete the table to analyze each transaction. Account Name Nov 1 Nov 4 Nov 9 Nov 16 Nov 25 146 Category Increase or Decrease Debit or Credit The Accounting Cycle: Journals and Ledgers AP-3B Chapter 4 LO 1 For the accounts listed below, determine if the normal balance is a debit or a credit. Also, indicate if a debit or a credit will decrease the account balance. Normal Balance Decrease Cash Accounts Receivable Accounts Payable Notes Payable Owner’s Capital Service Revenue Insurance Expense Prepaid Insurance Equipment Unearned Revenue Owner's Withdrawals Salaries Expense Office Supplies AP-4B LO 3 4 HomeStyle provides interior design solutions for residential and commercial spaces. During the month of July 2018, the following transactions took place. Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul 3 4 6 10 11 15 20 21 27 31 Provided services to a customer and received $3,100 cash Borrowed $2,500 from the bank Provided services worth $2,800 to a customer on account Received the utilities bill for $240, which will be paid later Paid $690 cash to reduce the balance of accounts payable Collected $1,900 cash from customers owing on account Paid $2,600 towards the bank loan principal Paid the amount owing from July 10 Paid salaries of $1,700 for the month with cash Purchased equipment worth $3,100, which will be paid later Prepare the journal entries for the above transactions. Date Account Title and Explanation PR Debit Credit 147 Chapter 4 The Accounting Cycle: Journals and Ledgers Date AP-5B Account Title and Explanation PR Debit Credit LO 3 4 Tracts of Land provides surveying services to construction companies and municipalities. During the month of February 2018, Tracts of Land had the following transactions. Feb Feb Feb Feb Feb Feb Feb Feb Feb 1 2 3 4 10 14 22 24 28 Purchased equipment worth $8,200, which will be paid later Provided services worth $20,200 to a customer on account Paid $1,900 cash for February's utilities Paid $1,600 for four months of insurance coverage Paid $2,000 cash to reduce the balance of accounts payable Paid $6,600 cash for a monthly maintenance contract Received a bill for $5,800 in travel expenses to be paid next month Received an advertising bill for $400, which will be paid next month Paid $2,730 to the bank to reduce the bank loan principal; interest was $30 and the remainder was principal Prepare the journal entries for the transactions. 148 The Accounting Cycle: Journals and Ledgers Date AP-6B Account Title and Explanation Chapter 4 PR Debit Credit LO 3 4 Cherry Consulting Firm is owned by Ron Cherry and offers consulting services for small businesses. During June 2018, the following transactions occurred. Jun 2 Received a deposit of $3,000 from a customer for services to be provided in the future Jun 3 Paid a $495 utility bill that was received and recorded last month Jun 8 Charged $1,400 in travel costs to a credit card Jun 17 Paid $1,000 cash to reduce the bank loan; of that amount, $75 is interest and the remainder is principal Jun 19 Ron withdrew $2,100 cash from the business for personal use Jun 28 Paid $4,900 for salaries for the month Prepare the journal entries for the above transactions. 149 Chapter 4 The Accounting Cycle: Journals and Ledgers Date AP-7B LO Account Title and Explanation PR Debit Credit 3 4 5 6 Lowe Consulting provides advice and resources to entrepreneurs starting their own businesses. The company is a sole proprietorship owned by Leslie Lowe. The closing balances at the end of August 2018 and the chart of accounts are shown below. Lowe Consulting Balance Sheet As at August 31, 2018 Assets Cash Accounts Receivable Office Supplies Equipment Liabilities $7,200 Accounts Payable 2,300 Unearned Revenue $3,400 1,400 850 Notes Payable 5,600 11,500 Total Liabilities 10,400 Owner’s Equity Lowe, Capital Total Assets 150 $21,850 Total Liabilities and Owner’s Equity 11,450 $21,850 The Accounting Cycle: Journals and Ledgers Account Description Chapter 4 Account # ASSETS Account Description Account # REVENUE Cash Accounts Receivable Prepaid Insurance Office Supplies Equipment 101 105 110 115 120 LIABILITIES 400 Service Revenue EXPENSES Insurance Expense Interest Expense Office Supplies Expense Rent Expense Accounts Payable Unearned Revenue Notes Payable 515 520 530 540 200 210 215 OWNER’S EQUITY Lowe, Capital Lowe, Withdrawals 300 310 During the month of September, Lowe Consulting had the following transactions. Sep Sep Sep Sep Sep Sep Sep Sep Sep 1 2 3 4 10 20 22 24 30 Paid $1,800 cash in advance for a one-year insurance policy Received $1,900 cash for services provided Paid $1,350 cash for September's rent Purchased office supplies on account worth $250 Paid $960 towards the bank loan principal and $40 of interest on the loan Received $2,200 cash from a customer booking consulting services in advance Collected $850 from a customer paying their account Paid $600 towards accounts payable The owner withdrew $1,600 cash for personal use Required a) Prepare the journal entries for the month of September. Date Account Title and Explanation PR Debit Credit 151 Chapter 4 The Accounting Cycle: Journals and Ledgers Date Account Title and Explanation PR Debit Credit b) Post the journal entries to the ledger accounts. Account: Date Account: Date Account: Date Description Description Description PR PR PR DR DR DR CR GL No: Balance CR GL No: Balance CR GL No: Balance Account: Date 152 GL No: Description PR DR CR Balance The Accounting Cycle: Journals and Ledgers Chapter 4 Account: Date GL No: Description PR DR CR Account: Date GL No: Description PR DR CR Account: Date Description PR DR CR Description PR DR CR Description PR DR CR Balance GL No: Description PR DR CR Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance Balance GL No: Description PR DR CR Balance 153 Chapter 4 The Accounting Cycle: Journals and Ledgers Account: Date GL No: Description PR DR CR Description PR DR CR Account: Date GL No: Account: Date c) Description PR DR CR Balance GL No: Description Prepare a trial balance at the end of September. 154 Balance GL No: Account: Date Balance PR DR CR Balance The Accounting Cycle: Journals and Ledgers AP-8B LO Chapter 4 3 4 5 6 Sokatoa, owned by Hiromi Nakata, had the following transactions for the month of July 2018. Jul 1 Purchased a new machine with $12,000 cash Jul 5 Provided services worth $10,000 to clients who will pay later Jul 12 Hiromi withdrew $5,000 cash from the business Jul 19 Received a maintenance bill for $1,100, which will be paid later Jul 31 Got a loan from the bank for $25,000 Required a) Prepare the journal entries for the month of July. Date Account Title and Explanation PR Debit Credit b) Post the journal entries to the ledger accounts. Account: Cash Date Description PR DR CR Opening Balance Account: Accounts Receivable Date Description Opening Balance GL No: 101 Balance 31,800 DR PR DR CR GL No: 105 Balance 5,000 DR 155 Chapter 4 The Accounting Cycle: Journals and Ledgers Account: Machine Date Description PR DR CR Opening Balance 6,000 DR Account: Accounts Payable Date GL No: 200 Balance Description PR DR CR Opening Balance Account: Notes Payable Date 3,500 CR Description PR DR CR Opening Balance Account: Nakata, Capital Date Description PR DR CR Description Account: Maintenance Expense Date Description Account: Salaries Expense Date GL No: 300 Balance 39,300 CR Account: Nakata, Withdrawals Date Description Account: Sales Revenue Date GL No: 215 Balance 0 CR Opening Balance 156 GL No: 120 Balance Description PR PR PR PR DR DR DR DR CR GL No: 310 Balance CR GL No: 400 Balance CR GL No: 520 Balance CR GL No: 540 Balance The Accounting Cycle: Journals and Ledgers c) Chapter 4 Prepare a trial balance at the end of July. Analysis Explain how the general ledger is similar to the T-accounts used in earlier chapters. AP-9B LO 1 6 The following are the accounts of DRAM Company and their corresponding normal balances on October 31, 2018. Account David, Capital Accounts Payable Insurance Expense Service Revenue Equipment Supplies Expense Cash Salaries Expense David, Withdrawals Rent Expense Telephone Expense Notes Payable Prepaid Rent Balance $20,400 13,200 1,000 6,800 30,500 2,900 5,700 4,100 3,100 2,200 1,200 11,700 1,400 Prepare DRAM Company’s trial balance for the month ended October 31, 2018. 157 Chapter 4 AP-10B The Accounting Cycle: Journals and Ledgers LO 6 The following account balances were taken from Macro Company’s general ledger on February 28, 2018. Account Chalmers, Capital Accounts Payable Prepaid Expenses Interest Payable Vehicle Computer Equipment Salary Expense Unearned Revenue Depreciation Expense Rent Expense Cash Service Revenue Prepare Macro Company’s trial balance. 158 Balance $10,050 13,000 5,000 825 32,000 19,000 31,000 8,000 1,700 2,400 15,275 74,500 The Accounting Cycle: Journals and Ledgers Chapter 4 Analysis The accountant at Macro Company was worried that he may have recorded some entries incorrectly in the journal, but upon seeing that the trial balance is in balance, he assumed that he must have done everything correctly. Is his assumption correct? Explain. AP-11B LO 1 Indicate whether increases and decreases in the following groups of accounts correspond to debits or credits. Increase Decrease Liabilities Owner's Equity Expenses Owner's Withdrawals Revenues Assets Analysis What is a normal balance? Provide an example. AP-12B LO 3 4 Helen Long owns and operates Long Landscaping, which provides landscaping and gardening services. During the month of August 2018, she had the following transactions. Aug Aug Aug Aug Aug Aug Aug Aug 1 3 6 8 17 20 22 28 Provided services to a customer who paid $800 cash Paid $1,000 to the bank to repay a bank loan; of that amount, $100 was interest Received a maintenance bill for $500, which will be paid later Paid $1,600 for a one-year insurance policy Paid $2,200 for rent for the month Provided services to a customer for $1,300 and the customer will pay later Paid the maintenance bill received on August 6 Received payment from the customer from August 20 Record the transactions in the journal. Date Account Title and Explanation PR Debit Credit 159 Chapter 4 The Accounting Cycle: Journals and Ledgers Date AP-13B Account Title and Explanation PR Debit Credit LO 6 On August 16, 2018, the bookkeeper for Reliable Administration discovered that an entry was made on August 9, to pay for a one-year insurance policy for $1,800; however, accounts payable was used instead of cash. Prepare the entries to correct this error. Date 160 Account Title and Explanation PR Debit Credit The Accounting Cycle: Journals and Ledgers AP-14B Chapter 4 LO 6 On February 21, 2018, the bookkeeper for Balsdon Consulting discovered that an entry was made on February 6 to pay for repairs expense with $800 cash; however, rent expense was debited. Prepare the entries to correct this error. Date AP-15B Account Title and Explanation PR Debit Credit LO 7 Sassy Salon is a small hair salon with only three employees—two hairdressers, and an accountant who also acts as the receptionist, cashier, and performs other miscellaneous tasks to keep the salon operational. Sassy Salon uses a computerized accounting system, where the accountant is supposed to enter each credit card and cash receipt transaction as soon as a customer pays. Based on the accountant’s input, the computerized accounting system automatically prepares journal entries, posts the entries to ledgers and prepares a trial balance at the end of the period. Sometimes, the amount of cash on hand at the end of the period is not the same as the cash balance reported by the computerized accounting system. This is mostly due to the accountant forgetting to input a transaction or making other mistakes, especially when the salon is busy and the amount of work is overwhelming. When there is a discrepancy, the accountant always has a difficult time locating the error and explaining the discrepancy to the business owner. Therefore, the accountant proposes to the owner that rather than inputting each sales transaction separately, she will wait until the end of the period to count the amount of cash on hand and enter sales transactions based on that amount. By doing so, there will never be a discrepancy. It also reduces the amount of work for the accountant, which allows her to focus on servicing customers. Should the owner approve the accountant’s proposed change? Why or why not? 161 Chapter 4 The Accounting Cycle: Journals and Ledgers Case Study CS-1 LO 1 2 3 4 5 6 7 Renu Mawani has been operating her own interior design business called Mawani Interiors for a couple of years. The following transactions occurred in March 2018. Mar 2 Paid cash of $2,000 for March’s office rental Mar 3 Renu invested $7,000 cash into the business Mar 4 Purchased equipment on account for $8,000 Mar 6 Received $2,800 cash from a client that owed the company for last month’s services Mar 8 Purchased office supplies using $370 cash Mar 10 Paid $6,900 cash for a consulting invoice received and recorded last month Mar 13 Completed work for a client and the client paid $2,900 cash Mar 15 Prepaid $1,800 cash for a one-year insurance policy Mar 16 Completed work for a client, who will pay $3,200 next month Mar 20 Discovered that an error was made on the transaction recorded on Mar 4; the equipment cost $8,800, not $8,000 Mar 23 Received a $6,000 cash deposit from a client for work to be completed in the next few months Mar 29 Received utility bills for $410 to be paid next month Mar 29 Signed a notes payable to borrow $12,000 from the bank Mar 30 Renu withdrew $3,000 cash for personal use Mar 31 Paid $18,000 cash for employee salaries Required a) Below is the list of account names that the company uses and their respective opening account balances as at the beginning of March. For each of the accounts, identify the account category (assets, liabilities, owner’s capital, owner’s withdrawals, revenue or expenses) and input the opening account balance in the debit or credit column based on the side of its normal balance. The answers have been filled in for the accounts payable account as an example. Be sure to total both the debit and credit sides. (Hint: If all your answers are correct, the total debit will be equal to the total credit.) Account Name Accounts Payable Accounts Receivable Cash Equipment Mawani, Capital Mawani, Withdrawals Notes Payable Office Supplies Prepaid Insurance Insurance Expense Rent Expense Salaries Expense Service Revenue Unearned Revenue Utilities Expense Total 162 Balance 6,900 5,400 2,200 11,600 12,500 0 0 200 0 0 0 0 0 0 0 Account Category Liabilities Debit Credit 6,900 The Accounting Cycle: Journals and Ledgers Chapter 4 b) Identify the steps in the accounting cycle that need to be done repeatedly during the accounting period before the trial balance can be prepared at the end of the accounting period. c) Record all of March’s transactions in the journal and post them to the ledger. The account number can be found on the top right corner of each account’s ledger. Date Account Title and Explanation PR Debit Credit 163 Chapter 4 Date Account: Date The Accounting Cycle: Journals and Ledgers Account Title and Explanation Description PR PR Debit DR Credit CR Account: Date 164 GL No: Balance GL No: Description PR DR CR Balance The Accounting Cycle: Journals and Ledgers Chapter 4 Account: Date GL No: Description PR DR CR Account: Date GL No: Description PR DR CR Account: Date Description PR DR CR Description PR DR CR Balance GL No: Description PR DR CR Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance Balance GL No: Description PR DR CR Balance 165 Chapter 4 The Accounting Cycle: Journals and Ledgers Account: Date GL No: Description PR DR CR Account: Date GL No: Description PR DR CR Account: Date Description PR DR CR Description PR DR CR Description PR DR CR 166 Balance GL No: Description PR DR CR Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance GL No: Account: Date Balance Balance GL No: Description PR DR CR Balance The Accounting Cycle: Journals and Ledgers Chapter 4 d) Prepare the trial balance. e) In order to improve the efficiency of the accounting process, Renu is considering recording transactions directly to the ledger and eliminating the use of a journal. Would it be ethical to do so? Explain. 167 Chapter 4 Notes 168 The Accounting Cycle: Journals and Ledgers
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Explanation & Answer

Kindly check the final work. The order had a lot of calculations and is quite involving but I have finally completed it. Thank you so much for working with me. Welcome again.

ACC 231
CH 4 Case Study
CS-1 on workbook pp 162-167

NAME

Part a - complete the account listing
Account Name
Accounts Payable
Accounts Receivable
Cash
Equipment
Mawani, Capital
Mawani, Withdrawals
Notes Payable
Office Supplies
Prepaid Insurance
Insurance Expense
Rent Expense
Salaries Expense
Service Revenue
Unearned Revenue
Utilities Expense
Total

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Balance
6,900
5,400
2,200
11,600

Account Category
liabilties
Assets
Assets
Assets
12,500 Assets
- Cash
- Liabilities
200 Assets
- Assets
Expenses
Expenses
- Liabilities
Revenue
Liabilities
Liabilities/Expenses

Part b - identify the accounting cycle steps prior to the trial balance
Step 1: Analyze and record financial transactions
Step 2: Posting financial transactions to the ledger
Step 3: Prepare an undusted trial balance
Step 4: Adjusting entries at the end of the period
Step 5: Prepare an adjusted trial balance.

$
$
$
$
$
$
$
$
$

Debit
6,900
5,400
2,000
19,600
19,500
3,000
12,000
570
1,800

$
$
$
$
$
$
$
$
$

Credit
6,9...


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