(Transaction Analysis–Service Company)
Christine Ewing is a licensed CPA. During the first month of operations of her business (a sole
proprietorship), the following events and transactions occurred.
April 2
2
3
7
11
12
17
21
30
30
30
Invested $35,197 cash and equipment valued at $18,933 in the business.
Hired a secretary-receptionist at a salary of $290 per week payable monthly.
Purchased supplies on account $712. (Debit an asset account.)
Paid office rent of $684 for the month.
Completed a tax assignment and billed client $1,555 for services rendered. (Use Service
Revenue account.)
Received $3,483 advance on a management consulting engagement.
Received cash of $3,043 for services completed for Ferengi Co.
Paid insurance expense $171.
Paid secretary-receptionist $1,668 for the month.
A count of supplies indicated that $209 of supplies had been used.
Purchased a new computer for $6,135 with personal funds. (The computer will be used
exclusively for business purposes.)
Journalize the transactions in the general journal. (If no entry is required, enter No entry as the
account and 0 for the amount. List multiple debit/credit entries from largest to smallest
amount, e.g. 10, 5, 2.)
Date
Apr. 2
Apr. 2
Apr. 3
Apr. 7
Apr. 11
Apr. 12
Apr. 17
Apr. 21
Apr. 30
Description/Account
Debit
Credit
Apr. 30
Apr. 30
(Corrected Trial Balance)
The trial balance of Geronimo Company does not balance. Your review of the ledger reveals the
following: (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance,
Accounts Payable, and Property Tax Expense were each understated $1,000. (c) A transposition error
was made in Accounts Receivable and Service Revenue; the correct balances for Accounts Receivable
and Service Revenue are $2,750 and $6,690, respectively. (d) A debit posting to Advertising Expense
of $300 was omitted. (e) A $3,321cash drawing by the owner was debited to Geronimo, Capital, and
credited to Cash.
GERONIMO COMPANY
Trial Balance
April 30, 2012
Debit
$2,219
2,570
893
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accounts Payable
Property Tax Payable
Geronimo, Capital
Service Revenue
Salaries Expense
Advertising Expense
Property Tax Expense
Credit
$8,119
4,693
753
11,319
6,960
4,081
1,293
$18,769
800
$24,931
Prepare a correct trial balance. (If answer is zero, please enter 0, do not leave any fields
blank.)
GERONIMO COMPANY
Trial Balance
April 30, 2012
Debit
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accounts Payable
Property Tax Payable
$
Credit
$
Geronimo, Capital
Geronimo, Drawing
Service Revenue
Salaries Expense
Advertising Expense
Property Tax Expense
$
$
(Corrected Trial Balance)
The trial balance of Scarlatti Corporation does not balance.
SCARLATTI CORPORATION
Trial Balance
April 30, 2012
Debit
$6,037
5,240
3,092
6,100
Cash
Accounts Receivable
Supplies on Hand
Furniture and Equipment
Accounts Payable
Common Stock
Retained Earnings
Service Revenue
Office Expense
Credit
$7,044
8,125
2,125
5,200
4,320
$24,789
$22,494
An examination of the ledger shows these errors.
1.
2
3.
4.
5.
Cash received from a customer on account was recorded (both debit and credit) as $1,380
instead of $1,830.
The purchase on account of a computer costing $3,682 was recorded as a debit to Office Expense
and a credit to Accounts Payable.
Services were performed on account for a client, $2,250, for which Accounts Receivable was
debited $2,250 and Service Revenue was credited $225.
A payment of $95 for telephone charges was entered as a debit to Office Expenses and a debit to
Cash.
The Service Revenue account was totaled at $5,200 instead of $5,280.
From this information prepare a corrected trial balance. (If answer is zero, please enter 0, do not
leave any fields blank.)
SCARLATTI CORPORATION
Trial Balance
April 30, 2012
Debit
Cash
Accounts Receivable
$
Credit
$
Supplies on Hand
Furniture and Equipment
Accounts Payable
Common Stock
Retained Earnings
Service Revenue
Office Expense
$
$
(Adjusting Entries)
The ledger of Chopin Rental Agency on March 31 of the current year includes the following selected
accounts before adjusting entries have been prepared.
Prepaid Insurance
Supplies
Equipment
Accumulated Depreciation-Equipment
Notes Payable
Unearned Rent Revenue
Rent Revenue
Interest Expense
Wage Expense
Debit
$3,600
2,800
25,000
Credit
$8,400
20,000
9,300
60,000
-014,000
An analysis of the accounts shows the following.
1.
2.
3.
4.
5.
The equipment depreciates $349 per month.
One-third of the unearned rent was earned during the quarter.
Interest of $571 is accrued on the notes payable.
Supplies on hand total $895.
Insurance expires at the rate of $344 per month.
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.
Description/Account
1.
2.
3.
4.
Debit
Credit
5.
(Adjusting Entries)
Stephen King, D.D.S., opened a dental practice on January 1, 2012. During the first month of
operations the following transactions occurred.
1.
2.
3.
4.
5.
Performed services for patients who had dental plan insurance. At January 31, $780 of such
services was earned but not yet billed to the insurance companies.
Utility expenses incurred but not paid prior to January 31 totaled $581.
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 $486 per month. Interest is $500 per
month.
Purchased a one-year malpractice insurance policy on January 1 for $12,000.
Purchased $1,600 of dental supplies. On January 31, determined that $538 of supplies were on
hand.
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.
Description/Account
1.
2.
3.
(To record depreciation expense.)
(To record interest expense.)
4.
5.
(Analyze Adjusted Data)
Debit
Credit
A partial adjusted trial balance of Safin Company at January 31, 2012, shows the following.
Supplies
Prepaid Insurance
Salaries Payable
Unearned Revenue
Supplies Expense
Insurance Expense
Salaries Expense
Service Revenue
SAFIN COMPANY
Adjusted Trial Balance
January 31, 2012
$970
4,020
$1,070
1,020
950
670
2,070
2,270
Answer the following questions, assuming the year begins January 1.
(a) If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was
purchased in January, what was the balance in Supplies on January 1?
$
(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 of the policy?
$
(c) If $2,770 of salaries was paid in January, what was the balance in Salaries Payable at December
31, 2011?
$
(d) If $1,870 was received in January for services performed in January, what was the balance in
Unearned Revenue at December 31, 2011?
$
(Prepare Financial Statements)
The adjusted trial balance of Cavamanlis Co. as of December 31, 2012, contains the following.
CAVAMANLIS CO.
Adjusted Trial Balance
December 31, 2012
Account Titles
Cash
Accounts Receivable
Prepaid Rent
Equipment
Accumulated Depreciation
Notes Payable
Accounts Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Salaries Expense
Rent Expense
Depreciation Expense
Interest Expense
Interest Payable
Debit
$19,632
7,580
2,940
18,710
Credit
$5,555
6,360
5,132
20,660
11,970
3,660
13,250
7,500
2,663
242
180
180
$63,107
$63,107
Prepare an income statement. (List multiple entries from largest to smallest amount, e.g.
(a)
10, 5, 2.)
CAVAMANLIS CO.
Income Statement
For the Year Ended December 31, 2012
Revenues
$
Expenses
$
Net Income
$
(b) Prepare a statement of retained earnings.
CAVAMANLIS CO.
Statement of Retained Earnings
For the Year Ended December 31, 2012
$
Add:
Less:
$
(c) Prepare a classified balance sheet. (List assets in order of liquidity and liabilities in order
from largest to smallest amounts, e.g. 15, 11, 7.)
CAVAMANLIS CO.
Balance Sheet
December 31, 2012
Assets
Current Assets
$
Total current assets
Property, plant, and equipment
$
Less:
Total assets
$
Liabilities and Stockholders' Equity
Current liabilities
$
Total current liabilities
Stockholders' equity
Total liabilities and stockholders' equity
$
(Closing Entries for a Corporation)
Presented below are selected account balances for Alistair Co. as of December 31, 2012.
Merchandise Inventory 12 ⁄31
⁄12
Common Stock
Retained Earnings
Dividends
Sales Returns and Allowances
Sales Discounts
Sales
$62,504
Cost of Goods Sold
75,077
46,013
18,926
12,430
15,203
412,188
Selling Expenses
Administrative Expenses
Income Tax Expense
$228,046
17,381
38,028
32,801
Prepare closing entries for Alistair Co. on December 31, 2012. (List multiple debit/credit entries
from largest to smallest amount, e.g. 10, 5, 2.)
Description/Account
(To close sales account.)
(To close expense accounts.)
(To close net income to retained earnings.)
(To close dividends to retained earnings.)
Debit
Credit
(Transactions, Financial Statements - Service Company)
Listed below are the transactions of Yasunari Kawabata, D.D.S., for the month of September.
Sep. 1 Kawabuta begins practice as a dentist and invests $24,030 cash.
Purchases furniture and dental equipment on account from Green Jacket Co. for
2
$18,960.
4 Pays rent for office space, $840 for the month.
4 Employs a receptionist, Michael Bradley.
5 Purchases dental supplies for cash, $976.
8 Receives cash of $1,770 from patients for services performed.
10 Pays miscellaneous office expenses, $450.
14 Bills patients $5,900 for services performed.
18 Pays Green Jacket Co. on account, $5,480.
19 Withdraws $3,110 cash from the business for personal use.
20 Receives $1,030 from patients on account.
25 Bills patients $3,010 for services performed.
30 Pays the following expenses in cash: office salaries $2,740; miscellaneous office
expenses $98.
30 Dental supplies used during September, $430.
Enter the transactions shown above in appropriate general ledger accounts. Use the following
ledger accounts: Cash; Accounts Receivable; Supplies on Hand; Furniture and Equipment;
Accumulated Depreciation; Accounts Payable; Yasunari Kawabata, Capital; Service Revenue;
Rent Expense; Miscellaneous Office Expense; Office Salaries Expense; Supplies Expense;
Depreciation Expense; and Income Summary. Record depreciation using a 5-year life on the
furniture and equipment, the straight-line method, and no salvage value. Do not use drawing
and retained earnings accounts. (List multiple Income Summary entries in order of
expense accounts appearance.)
Cash
Furniture And Equipment
Sep.1
Sep.4
8
5
20
10
18
Sep. 2
Yasunari Kawabata, Capital
Sep.19
19
Sep. 1
Sep.
30
Bal.
30
30
30
Bal. 30
Accounts Payable
Sep. 18
Accounts Receivable
Sep. 2
Bal.
30
Sep.
14
Sep.
20
Service Revenue
25
Bal. 30
Sep. 30
Sep. 8
14
Rent Expense
Sep. 4
Sep. 5
25
Sep.
30
Supplies on Hand
Sep.
30
Accumulated Depreciation
Sep.
30
Bal. 30
Miscellaneous Office Expense
Sep.
10
Sep.
30
30
Sep. 30
Income Summary
Sep.
30
30
30
30
30
Office Salaries Expense
Sep.
30
Sep.
30
Sep.
30
Supplies Expense
Sep.
30
30
Sep. 30
Depreciation Expense
Sep.
30
Prepare a trial balance. (If answer is zero please enter 0, do not leave any answer
blank.)
YASUNARI KAWABATA, D.D.S.
Trial Balance
September 30
Debit
Cash
Accounts Receivable
Supplies on Hand
Furniture and Equipment
Accumulated Depreciation
Accounts Payable
Yasunari Kawabata, Capital
$
Credit
$
Service Revenue
Rent Expense
Miscellaneous Office Expense
Office Salaries Expense
Supplies Expense
Depreciation Expense
Totals
$
$
Prepare an income statement, a statement of owner's equity, and an unclassified balance sheet.
(List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
YASUNARI KAWABATA, D.D.S.
Income Statement
For the Month of September
Revenues:
$
Expenses:
$
Total Expenses
Net Income
$
YASUNARI KAWABATA, D.D.S.
Statement of Owner's Equity
For the Month of September
$
Less:
Assets
Cash
Accounts Receivable
$
YASUNARI KAWABATA, D.D.S.
Balance Sheet
As of September 30
Liabilities and Owner's Equity
$
Accounts Payable
Yasunari Kawabata,
Capital
Supplies
Furniture and Equip.
Total liabilities and
owner's equity
Acc. Depreciation
Total assets
$
$
Prepare a post-closing trial balance. (If answer is zero please enter 0, do not leave any
answer blank.)
YASUNARI KAWABATA, D.D.S.
Post-closing Trial Balance
September 30
Debit
Credit
Cash
$
$
$
$
Accounts Receivable
Supplies on Hand
Furniture and Equipment
Accumulated Depreciation
Accounts Payable
Yasunari Kawabata, Capital
Totals