Group Work – Chapters 1-4
1.
The following events took place for XYZ Co. during the month of September 2012.
How much should XYZ Co. report as Total Expenses on the Income Statement for the month
of September 2012?

On September 1, building rent of $2,100 was paid to the landlord for 3 months rent in advance.
The Prepaid Rent account was debited for $2,100 on September 1.
$700

XYZ Co. received a telephone bill for $250. The entire bill is for services used during
September.
$250

XYZ Co. paid cash for Office Supplies of $2,000 in September. Office Supplies of $1,300 were
used during the month.
$1,300

XYZ Co. used services from employees amounting to $3,500. Employees will be paid for those
services next month.
$3,500

XYZ Co. purchased Inventory for $7,000.

In September, XYZ Co. paid $800 on an Accounts Payable balance. Goods related to the
Accounts Payable transaction were ordered and received in August.

XYZ Co. paid the local newspaper $600 cash for a half-page ad that will appear in October’s
paper.

XYZ Co. paid $500 to a plumber for work done on the building during September.
$500
Total Expenses for September? _________$6,250_______________
2.
The following events took place for XYZ Co. during the month of September 2012.
How much should XYZ Co. report as Total Revenue on the Income Statement for the month of
September 2012?

XYZ Co. received $500 cash in the mail for services performed and billed to a customer in
August.

On August 1, XYZ Co. received $4,400 cash in advance for services to be performed in the
following 2 months. In September, XYZ Co. had fulfilled half that obligation.
$2,200

XYZ Co. performed services in September of $3,000 and billed the customer for payment to be
received in October.
$3,000

XYZ Co. performed services in September of $1,000 and received the cash at the time of
service.
$1,000
Total Revenues for September?____________$6,200______________
Group Work – Chapters 1-4
3.
Prepare a journal entry in General Journal format for each of the following external transactions of
XYZ Co. during the month of November 2012.
a.
On November 1, XYZ Co. received $20,000 cash and $50,000 worth of Equipment from
Owners in exchange for Common Stock in the company.
Cash
$20,000
Equipment
$50,000
Common Stock
b.
On November 1, XYZ purchased an Insurance Policy that will provide risk coverage for the
next 6 months. The policy cost $1,800.
Prepaid Insurance
Cash
c.
$1,800
$1,800
On November 3, XYZ Co. sold some Land they were holding for a future business site – at
cost. The Land was sold for $15,000 – receiving $5,000 Cash and a Note Receivable for the
balance.
Cash
Note Receivable
Land
d.
$70,000
$5,000
$10,000
$15,000
On November 15, XYZ Co. billed customers $4,500 for work performed during the month of
November.
Accounts Receivable $4,500
Sales Revenue
$4,500
e.
On November 17, XYZ Co. received $5,000 cash in advance for services to be performed in
the next two months.
Cash
f.
$5,000
Unearned Revenue $5,000
On November 18, XYZ Co. purchased supplies of $2,400 on account.
Supplies (Asset)
$2,400
Accounts Payable
$2,400
g.
On November 20, XYZ Co. received cash of $2,000 from customers we earlier billed for
services performed on November 15th.
Cash
$2,000
Accounts Receivable $2,000
3. Assume the date is December 31, 2012. Prepare adjusting entries for XYZ Co. assuming the
following adjustments need to be made to accounts.
a.
On December 31, 2012, XYZ Co. received a telephone bill of $350 for services used in
December. The bill will be paid in January.
Utilities Expense
$350
Utilities Payable
b.
On November 1, 2012, XYZ purchased a 6 month Insurance policy for $1,800. Prepare an
adjusting entry at December 31, 2012 assuming the account has not been adjusted since
November 1.
Insurance Expense $600
Prepaid Insurance
c.
$350
$600
On November 17, 2012, XYZ received $5,000 cash for services to be performed in the next
two months. As of December 31, 2012, XYZ has performed $3,000 worth of those services.
Unearned Revenue $3,000
Sales Revenue
$3,000
c.
Assume at December 1, 2012, the Supplies account had a balance of $8,000. During the
month of December supplies of $16,000 were purchased. At December 31, 2012, a count of
supplies on hand says that there are $5,000 worth of supplies remaining. Prepare an adjusting
entry for the amount of supplies used during the month of December.
Supplies (Asset)
$8,000
$16,000
$19,000
Supplies Exp Adjustment
$5,000
Supplies Expense
$19,000
Supplies (Asset)
$19,000
4.
XYZ Co. had the following Account Balances at December 31, 2012. It is time for them to
close their temporary accounts to get ready for the new fiscal year beginning January 1, 2013.
Prepare the closing entry that would be necessary.
Cash
$16,000
Contributed Capital $10,000
Accounts Receivable $26,000
Sales Revenue
$93,000
Inventory
$21,300
Cost of Goods Sold $60,400
Accounts Payable
$15,000
Rent Expense
$12,400
Unearned Revenue $ 8,000
Interest Expense
$ 1,800
Retained Earnings
$14,900
Depreciation Expense $ 3,000
Closing Entry
Sales Revenue
$93,000
Cost of Goods Sold
Rent Expense
Interest Expense
Depreciation Expense
Retained Earnings
$60,400
$12,400
$1,800
$3,000
$15,400