SIERRA CORPORATION On October 1, 2014, Sierra Corporation opened for business. The company has a monthly accounting period. The following transactions occurred during the company's first month. October 1 Issued 10,000 shares of common stock for $10,000 cash. October I Borrowed $5,000 from Castle Bank by signing a 3-month, 12%, $5,000 note payable. Purchased equipment by paying $5,000 cash to Superior Equipment Sales Co. Received $1.200 cash from a client for services to be performed in the future. Received $10,000 in cash for services performed. Paid $900 cash for October office rent. Paid S600 cash for a one-year insurance policy effective October 1. Purchased $2,500 of supplies on credit from Acro Supply. October 2 October 2 October 3 October 3 October 4 October 5 October 20 Paid a $500 cash dividend to stockholders. October 26 Paid $4,000 cash for employee salaries. The chart of accounts for Sierra Corporation includes the following accounts. Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Notes Payable Accounts Payable Interest Payable Unearned Service Revenue Salaries Payable Common Stock Retained Earnings Dividends Service Revenue Salaries Expense Supplies Expense Rent Expense Insurance Expense Interest Expense Depreciation Expense Income Summary Instructions a. Journalize the October transactions. b. Post to the ledger accounts. c. Prepare an unadjusted trial balance at October 31. (If an account has a zero balance, then it is not necessary to enter an amount for that account.) d. Journalize the following adjustments on October 31. 1. A physical count of supplies at the close of business on October 31 reveals that S1,000 of supplies are still on hand. 2. One-twelfth of the insurance expired in October. 3. Depreciation on equipment for the month of October was $40.
SIERRA CORPORATION On October 1, 2014, Sierra Corporation opened for business. The company has a monthly accounting period. The following transactions occurred during the company's first month. October 1 Issued 10,000 shares of common stock for $10,000 cash. October I Borrowed $5,000 from Castle Bank by signing a 3-month, 12%, $5,000 note payable. Purchased equipment by paying $5,000 cash to Superior Equipment Sales Co. Received $1.200 cash from a client for services to be performed in the future. Received $10,000 in cash for services performed. Paid $900 cash for October office rent. Paid S600 cash for a one-year insurance policy effective October 1. Purchased $2,500 of supplies on credit from Acro Supply. October 2 October 2 October 3 October 3 October 4 October 5 October 20 Paid a $500 cash dividend to stockholders. October 26 Paid $4,000 cash for employee salaries. The chart of accounts for Sierra Corporation includes the following accounts. Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Notes Payable Accounts Payable Interest Payable Unearned Service Revenue Salaries Payable Common Stock Retained Earnings Dividends Service Revenue Salaries Expense Supplies Expense Rent Expense Insurance Expense Interest Expense Depreciation Expense Income Summary Instructions a. Journalize the October transactions. b. Post to the ledger accounts. c. Prepare an unadjusted trial balance at October 31. (If an account has a zero balance, then it is not necessary to enter an amount for that account.) d. Journalize the following adjustments on October 31. 1. A physical count of supplies at the close of business on October 31 reveals that S1,000 of supplies are still on hand. 2. One-twelfth of the insurance expired in October. 3. Depreciation on equipment for the month of October was $40.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:SIERRA CORPORATION
On October 1, 2014. Sierra Corporation opened for business. The company has a monthly
accounting period. The following transactions occurred during the company's first month.
October 1
October I
Issued 10,000 shares of common stock for $10,000 cash.
Borrowed $5,000 from Castle Bank by signing a 3-month, 12%, $5,000 note
payable.
Purchased equipment by paying $5,000 cash to Superior Equipment Sales Co.
Received $1,200 cash from a client for services to be performed in the future.
Received $10,000 in cash for services performed.
Paid $900 cash for October office rent.
Paid $600 cash for a one-year insurance policy effective October 1.
Purchased $2,500 of supplies on credit from Aero Supply.
Paid a $500 cash dividend to stockholders.
Paid $4,000 cash for employee salaries.
October 2
October 2
October 3
October 3
October 4
October 5
October 20
October 26
The chart of accounts for Sierra Corporation includes the following accounts.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation-Equipment
Notes Payable
Accounts Payable
Interest Payable
Unearned Service Revenue
Salaries Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Salaries Expense
Supplies Expense
Rent Expense
Insurance Expense
Interest Expense
Depreciation Expense
Income Summary
Instructions
a. Journalize the October transactions.
b. Post to the ledger accounts.
c. Prepare an unadjusted trial balance at October 31. (If an account has a zero balance,
then it is not necessary to enter an amount for that account.)
d. Journalize the following adjustments on October 31.
1. A physical count of supplies at the close of business on October 31 reveals that
$1,000 of supplies are still on hand.
2. One-twelfth of the insurance expired in October.
3. Depreciation on equipment for the month of October was $40.
4. $400 of the unearned service revenue was earned in October.
5. In October, the company performed services worth $200. As of October 31, this has
not been recorded. The client has not been billed and payment has not been received.
6. Interest expense of $50 has been incurred (but not recorded or paid) as of October 31.
7. Salaries expense of $1,200 has been incurred (but not recorded or paid) as of October
31.
Post adjusting entries to the ledger accounts.
f. Prepare an adjusted trial balance at October 31. (If an account has a zero balance, then
it is not necessary to enter an amount for that account.)
g. Prepare the following financial statements. (The shaded spaces in the financial
statements indicate that an account title or an amount should be entered there.)
1. Income statement
2. Statement of retained earnings
3. Classified balance sheet
e.
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