accounting assignment

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Week One Exercise Assignment Basic Accounting Equations 1. Recognition of normal balances The following items appeared in the accounting records of Triguero’s, a retail music store that also sponsors concerts. Classify each of the items as an asset, liability, revenue, or expense from the company’s viewpoint. Also indicate the normal account balance of each item. Classification a. b. c. d. e. f. g. h. i. Amounts paid to a mall for rent Amounts to be paid in 10 days to suppliers A new fax machine purchased for office use Land held as an investment Amounts due from customers Daily sales of merchandise sold, Promotional costs to publicize a concert A long-term loan owed to Citizens Bank The albums, tapes, and CDs held for sale to customers Expense Liability Asset Asset Asset Revenue Expense Liability Asset Normal Balance Debit Credit Debit Debit Debit Credit Debit Credit Debit 2. Basic journal entries. The following pertain to the Jennifer Royall Company: May 1 Jennifer Royall invested cash of $25,000 and land valued at $15,000 into the business. Cash 25,000 Land 15,000 Owners’ Equity 40,000 (Investment by owner) 5 Provided $1,000 of services to Jason Ratchford, a client, on account. Accounts receivable 1,200 Revenue 1,200 (Services on Account) 9 Paid $1,250 of salaries to an employee. Salary expense 1,250 Cash 1,250 14 Acquired a new computer for $4,200 on account. Computer equipment 4,200 Accounts payable 4,200 (Purchased computer on account) 20 Collected $800 from Jason Ratchford for services provided on May 5. Cash $800 Accounts receivable $800 (Received $800 of the $1,000 owed by Ratchford) 24 Borrowed $2,500 from BestBanc by securing a six-month loan. Cash 2,500 Notes payable 2,500 (Borrowed $7,500 from Best Banc, 6 months) 3. Balance sheet preparation The following data relate to Preston Company as of December 31, 20XX: Building $40,000 Accounts receivable $24,000 Cash 21,000 Loan payable 30,000 J. Preston, capital 65,000 Land 21,000 Accounts payable ? Prepare a balance sheet in good form as of December 31, 20XX. Preston Company Balance Sheet as at December 31, 20XX Assets Current assets Cash Liabilities Current Liabilities $21,000 Accounts payable Accounts receivable 24,000 Total Current Liabilities Total Current Assets 45,000 Long-Term Liabilities $11,000 11,000 Long-Term Assets: Loan payable 30,000 Building 44,000 Total Long-Term Liabilities 30,000 Land 21,000 Total Liabilities 41,000 Total Long-Term Assets 65,000 Capital Total Assets 106,000 J. Preston Capital $65,000 Total Assets 106,000 4. Basic Transaction Processing On November 1 of the current year, Richard Simmons established a sole proprietorship. The following transactions occurred during the month: 1. Simmons invested $32,000 into the business for $32,000 in common stock. 2. Paid $5,000 to acquire a used minivan. 3. Purchased $1,800 of office furniture on account. 4. Performed $2,100 of consulting services on account. 5. Paid $300 of repair expenses. 6. Received $800 from clients who were previously billed in item 4. 7. Paid $500 on account to the supplier of office furniture in item 3. 8. Received a $150 electric bill, to be paid next month. 9. Simmons withdrew $800 from the business. 10. Received $250 in cash from clients for consulting services rendered. Assets Cash Accounts = Office Van furniture Liabilities+ Equity Accoun ts Payable Common Stocks Revenues Dividends Expense receivable 1. $32,000 $32,000 2. ($5,000) $5,000 3. 4. $1,800 $2,100 5. ($300) 6. $800 $1,800 $2,100 ($300) $800 7. ($500) ($500) 8. $150 9. ($800) ($150) ($800) 10. ($250) $17,950 $250 $1,300 $1,800 $5,000 $1,450 $31,200 $1,900 C.1. Liabilities= $1,450 Liabilities appear on the balance sheet 2. Revenue- Expenses= Net Profit. Revenue exceeded expenses by $1,900 and cash is positive, indicating a “good” month. 5. Transaction analysis and statement preparation. The transactions that follow relate to Burton Enterprises for March 20X1, the company’s first month of activity. 3/1 Joanne Burton, the owner, invested $20,000 into the business. 3/4 Performed $2,400 of services on account. 3/7 Acquired a small parcel of land by paying $6,000 cash. 3/12 Received $500 from a client who was billed previously on March 4. 3/15 Paid $200 to the Journal Herald for advertising expense. 3/18 Acquired $9,000 of equipment from Park Central Outfitters by paying $7,000 down and agreeing to remit the balance owed within the next 2 weeks, (A/P) 3/22 Received $300 cash from clients for services. 3/24 Paid $1,500 on account to Park Central Outfitters in partial settlement of the balance due from the transaction on March 18. 3/28 Rented a car from United Car Rental for use on March 28. Total charges amounted to $125, with United billing Burton for the amount due. 3/31 Paid $600 for March wages. 3/31 Processed a $600 cash withdrawal (dividend) from the business for Joanne Burton Assets Cash = Liabilities Accounts Land receivables Equipment Accounts Common Dividends Revenues Payable Stock 3/1$20,000 3/4 + Owners Equity $20,000 $2,400 $2,400 3/7 ($6,000) 3/12 $500 $6,000 ($500) 3/15 ($200) ($200) 3/18 ($7,000) $9,000 $2,000 3/22 $300 $300 3/24 ($1,500) ($1,500) 3/28 $125 ($125) 3/31 ($600) ($600) 3/31($600) $4,900 $1,900 ($600) $6,000 $9,000 $375 $19,400 Burton Enterprises Income Statement for the Period Ending March, 20X1 Revenue $2,700 Expenses: Advertising expense $200 Auto Expense Wage Expense Net Income Exp. $125 $900 $1,225 $1,475 $1,775 Burton Enterprises Statement of Retained Earnings for the Period Ending March 20X1 Beginning Retained Earnings (3/1/20X1) Add: Net Income $0 $1,475 Subtotal $1,475 Subtract: Dividends $600 Ending Retained Earnings Balance (3/1/20X1) $875 Burton Enterprises Balance Sheet as at March 31, 20X1 Assets Cash $4,900 Accts Rec $1,900 Land $6,000 Equipment $9,000 Total Assets $21,800 Liabilities: Accts Pay Total Liabilities $375 $375 Stockholder’s Equity: Common Stock Retained Earnings $20,000 $875 Total Stockholder’s Equity $20,875 Total Liabilities& Equity $21,250 6. Entry and Trial Balance Preparation Lee Adkins is a portrait artist. The following schedule presents Lee’s combined chart of accounts and trial balance as of May 31. Account # Account Name Debit Credit 110 Cash 2,700 120 Accounts receivable 12,100 130 Equipment& Supplies 2,800 140 Studio 210 Accounts Payable 2,600 310 Lee Adkins, Capital 57,400 320 Lee Adkins, Drawing 410 Profession Fee Revenue 510 Advertising Expense 2,300 520 Salaries Expense 2,100 540 Utilities Expense 2,000 45,000 30,000 39,000 $99,000 $99,000 The general ledger also revealed account no. 530, Legal Account Expense. The following transactions occurred during June: 6/2 Collected $3,000 on account from customers 6/7 Sold 25% of the equipment and supplies to a young artist for $700 for cash. 6/10 Received a $300 invoice from the accountant for preparing last quarter’s financial statements. 6/15 Paid $1,900 to creditors on account. 6/27 Adkins withdrew $2,000 cash for personal use. 6/30 a. Billed a customer $3,000 for a portrait painted this month Adkins Studio-General Journal entries 6/2 Cash 110 Accounts Receivable 120 3,000 3,000 (Received Cash on Account) 6/7 Cash 110 Equipment& Supplies 130 700 700 (Sold Equipment & Supplies) 6/10 Cash 530 Accounts Payable 210 300 300 (Received Bill for Accounting Services) 6/15 Accounts Payable 210 Cash 110 1,900 1,900 (Paid Creditors on Account) 6/27 Lee Adkins, Drawing 320 2,000 Cash 110 2,000 (Owner Withdrawal) 6/30 Accounts Receivable Cash 120 . 3,000 110 Cash Date 20XX 5/31 Exp. Balance Post Ref. 3,000 acct. 110 Debit Credit Balance 2,700 6/2 J2 3,000 5,700 6/7 J2 700 6,400 6/15 J2 1,900 4,500 6/27 J2 2,000 2,500 Accounts. Receivable Date 20XX 5/31 Exp. Post Ref. Debit 6/30 J2 3,000 3,000 Equipment& Supplies Exp. Post Ref. Debit Exp. 5/31 Balance 6/10 Exp. Balance Post Ref. 2,100 Acct.140 Debit Credit Balance 45,500 Accounts Payable 5/31 Credit 700 Studio Date 20XX Acct. 130 2,800 J2 Date 20XX 9,100 12,100 Balance 6/7 Balance 12,100 J2 5/31 Credit Balance 6/2 Date 20XX Acct. 120 Post Ref. Acct. 210 Debit Credit Balance Balance 2,600 J2 300 2,900 6/15 J2 2,100 Lee Adkins, Capital Date 20XX 5/31 Exp. Post Ref. Debit 5/31 Exp. Post Ref. Debit 2,000 Post Ref. Debit J2 Date 20XX Exp. 5/31 Balance 32,000 Acct. 410 Credit 3,000 Post Ref. Debit Balance Balance 42,000 Acct. 510 Credit Balance 2,300 Salaries Expense Exp. Balance 39,000 Advertising Expense 5/31 Credit Balance 6/30 Date 20XX Acct. 320 30,000 J2 Exp. Balance 57,400 Professional Fee Revenue 5/31 Credit Balance 6/27 Date 20XX Acct. 310 Balance Lee Adkins, Drawing Date 20XX 800 Post Ref. Acct. 520 Debit Credit Balance 2,100 Legal& Accounting Expense Date 20XX Exp. 6/10 Post Ref. Debit J2 300 Credit 5/31 Exp. Post Ref. Acct. 540 Debit Credit Balance Balance Sheet as at June 30, 20XX $2,500 Accounts receivable 12,100 Equipment& Supplies 2,100 Studio $45,000 Accounts Payable 800 Lee Adkins, Capital 57,400 Lee Adkins, Drawing 32,000 Professional Fee Revenue 42,000 Advertising Expense 2,300 Salaries Expense 2,100 Legal& Accounting Expense Utilities Expense Balance 2,000 Adkins Studio Cash Balance 300 Utilities Expense Date 20XX Acct. 530 300 2,000 100,200 100,200 7. Journal entry preparation On January 1 of the current year, Peter Houston invested $80,000 cash with his company MuniServ. The cash was obtained from an owner investment by Peter Houston of $50,000 and a $30,000 bank loan. Shortly thereafter, the company acquired selected assets of a bankrupt competitor. The acquisition included land ($10,000), a building ($40,000) and vehicles ($10,000). MuniServ paid $45,000 at the time of the transaction and agreed to remit the remaining balance due of $15,000 (account payable) by February 15. During January, the company had additional cash outlays for the following items: Purchases of store equipment 4,600 Note payment 500 Salaries expense 2,300 Advertising expense 700 The January utility bill of $200 was received on January 31 and will be paid next month. MuniServ rendered services to clients on account to $9,400. All customers have been billed; by month-end, $3,700 had been received in settlement of account balances. a. Present journal entries that reflect MuniServ’s January transactions, including the $80,000 raised from the owner investment and loan 1. Cash 80,000 Notes payable 30,000 Peter Houston, Capital 50,000 2. Land 10,000 Building 40,000 Vehicles 10,000 Cash 45,000 Accounts payable 15,000 3. Store equipment 4,600 Cash 4,600 4. Notes payable 500 Cash 500 5. Salary expense 2,300 Cash 2,300 6. Advertising expense 700 Cash 700 7. Utility expense 200 Accounts payable 8. Accounts receivable 200 9,400 Revenue 9. Cash 9,400 3,700 Accounts receivable 3,700 b. Compute the total debits, total credits, and ending balance that would be found in the company’s cash account. General Ledger Cash Account Date 1/1/20XX 1/X/20XX 1/X/20XX 1/X/20XX 1/X/20XX 1/X/20XX 1/X/20XX Total Description Investment Purchase Asset Purchase store equipment store equipment Paid note Paid salaries Paid advertising Collected A/R Debit 80,000 Credit 45,000 4,600 500 2,300 700 3,700 83,700 53,100 Balance 80,000 35,000 30,400 29,400 27,600 26,900 30,600 C. Determine the amount that would be shown on the January 31 trial balance for Accounts Payable. Is the balance a debit or a credit? TRIAL BALANCE DEBITS CASH CREDITS 30,600 ACCOUNTS RECEIVABLE 3,700 LAND 10,000 BUILDING 40,000 VEHICLES 10,000 EQUIPMENT 4,600 ACCOUNTS PAYABLE 15,200 NOTES PAYABLE 28,500 PETER HOUSTON, CAPITAL 50,000 SERVICE REVENUE 9,400 SALARIES EXPENSE 2,300 ADVERTISING EXPENSE 700 UTILITIES EXPENSE 200 Totals $ 102,100 $102,100 ...
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