On August 1, 2020, Mark Diamond began a tour company in the Northwest Territories called Millennium Arctic Tours. The following occurred during the first month of operations: Aug. 1 Purchased office furniture on account; $4,700. 1 Mark Diamond invested $6,100 cash into his new business. 2. Collected $2,550 in advance for a three-week guided caribou watching tour beginning later in August. Paid $4,650 for six months' rent for office space effective August 1. Received $2,100 for a four-day northern lights viewing tour just completed. Paid $1,050 for hotel expenses regarding the August 4 tour. 15 Mark withdrew cash of $600 for personal use. 3 4 22 Met with a Japanese tour guide to discuss a $100,000 tour contract. 31 Paid wages of $1,210. Required 1. Prepare general journal entries to record the August transactions. 2. Set up the following T-accounts: Cash (101); Prepaid Rent (131); Office Furniture (161); Accumulated Depreciation, Office Furniture (162); Accounts Payable (201); Unearned Revenue (233); Mark Diamond, Capital (301); Mark Diamond, Withdrawals (302); Revenue (401); Depreciation Expense, Office Furniture (602); Wages Expense (623); Rent Expense (640); Telephone Expense (688); and Hotel Expenses (696). 3. Post the entries to the accounts; calculate the ending balance in each account. 4. Prepare an unadjusted trial balance at August 31, 2020.
On August 1, 2020, Mark Diamond began a tour company in the Northwest Territories called Millennium Arctic Tours. The following occurred during the first month of operations: Aug. 1 Purchased office furniture on account; $4,700. 1 Mark Diamond invested $6,100 cash into his new business. 2. Collected $2,550 in advance for a three-week guided caribou watching tour beginning later in August. Paid $4,650 for six months' rent for office space effective August 1. Received $2,100 for a four-day northern lights viewing tour just completed. Paid $1,050 for hotel expenses regarding the August 4 tour. 15 Mark withdrew cash of $600 for personal use. 3 4 22 Met with a Japanese tour guide to discuss a $100,000 tour contract. 31 Paid wages of $1,210. Required 1. Prepare general journal entries to record the August transactions. 2. Set up the following T-accounts: Cash (101); Prepaid Rent (131); Office Furniture (161); Accumulated Depreciation, Office Furniture (162); Accounts Payable (201); Unearned Revenue (233); Mark Diamond, Capital (301); Mark Diamond, Withdrawals (302); Revenue (401); Depreciation Expense, Office Furniture (602); Wages Expense (623); Rent Expense (640); Telephone Expense (688); and Hotel Expenses (696). 3. Post the entries to the accounts; calculate the ending balance in each account. 4. Prepare an unadjusted trial balance at August 31, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On August 1, 2020, Mark Diamond began a tour company in the Northwest Territories called Millennium Arctic Tours.
The following occurred during the first month of operations:
Aug.
Purchased office furniture on account; $4,70o.
1.
Mark Diamond invested $6,100 cash into his new business.
2.
Collected $2,550 in advance for a three-week guided caribou watching tour beginning later in August.
3
Paid $4,650 for six months' rent for office space effective August 1.
Received $2,100 for a four-day northern lights viewing tour just completed.
Paid $1,050 for hotel expenses regarding the August 4 tour.
Mark withdrew cash of $600 for personal use.
4.
15
22
Met with a Japanese tour guide to discuss a $100,000 tour contract.
31
Paid wages of $1,210.
Required
1. Prepare general journal entries to record the August transactions.
2. Set up the following T-accounts: Cash (101); Prepaid Rent (131); Office Furniture (161); Accumulated
Depreciation, Office Furniture (162); Accounts Payable (201); Unearned Revenue (233); Mark Diamond, Capital
(301); Mark Diamond, Withdrawals (302); Revenue (401); Depreciation Expense, Office Furniture (602); Wages
Expense (623); Rent Expense (640); Telephone Expense (688); and Hotel Expenses (696).
3.
Post the entries to the accounts; calculate the ending balance in each account.
4.
Prepare an unadjusted trial balance at August 31, 2020.
5. Use the following information to prepare and post adjusting entries on August 31:
a. The office furniture has an estimated life of three years and a $272 residual value. Use the straight-line
method to depreciate the furniture.
b. Two-thirds of the August 2 advance has been earned.
c. One month of the Prepaid Rent has been used.
d. The August telephone bill was not received as of August 31 but amounted to $230.
6. Prepare an adjusted trial balance.
7. Prepare an income statement, a statement of changes in equity, and a balance sheet.
Analysis Component: When a company shows revenue on its income statement, does this mean that cash equal to
revenues was received during the period in which the revenues were reported?
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