DISCUSSION QUESTION An invoice for consultancy service provided to Running Track Club for $25,000 was left in a desk drawer unnoticed and had been omitted completely from the books. The records showed that a cash receipt for $15,000 was issued relating to this transaction while the balance was on account. The company records its consultancy fees in service revenue account. Purchase of medical supplies on February 3 was for $18,000and not $1,800 as previously incorrectly reported. On Feb 1 the $55,000 invested by Sample ought to have been allocated $45,000 bank account and $10,000 office equipment based on confirmation from the owner that the previous info provided was incorrectly stated. Drawings of $1,000 were not recorded. An electricity bill for $5,000 paid by cash was placed in a desk drawer and not presented with the first set of transactions. The company records its electricity charges in the utility expense account. Required: Record the journal entries necessary to correct each of the errors mentioned above. Narrations are not required Update the accounts and prepare the company’s Trial Balance based on both sets of information provided. Prepare the following for the month of February 2015: Income statement Statement of owner’s equity Balance Sheet

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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DISCUSSION QUESTION

An invoice for consultancy service provided to Running Track Club for $25,000 was left in a desk drawer unnoticed and had been omitted completely from the books. The records showed that a cash receipt for $15,000 was issued relating to this transaction while the balance was on account. The company records its consultancy fees in service revenue account.
Purchase of medical supplies on February 3 was for $18,000and not $1,800 as previously incorrectly reported.
On Feb 1 the $55,000 invested by Sample ought to have been allocated $45,000 bank account and $10,000 office equipment based on confirmation from the owner that the previous info provided was incorrectly stated.
Drawings of $1,000 were not recorded.
An electricity bill for $5,000 paid by cash was placed in a desk drawer and not presented with the first set of transactions. The company records its electricity charges in the utility expense account.

Required:

Record the journal entries necessary to correct each of the errors mentioned above. Narrations are not required

Update the accounts and prepare the company’s Trial Balance based on both sets of information provided.

Prepare the following for the month of February 2015:

Income statement
Statement of owner’s equity
Balance Sheet

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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