Concept explainers
Complete accounting cycle
For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 20Y6, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud entered into the following transactions during April:
Record the following transactions on Page 2 of the journal:
Instructions
- 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)
- 2. Post the journal to a ledger of four-column accounts.
- 3. Prepare an unadjusted
trial balance . - 4. At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6).
- (a) Insurance expired during April is $350.
- (b) Supplies on hand on April 30 are $1,225.
- (c)
Depreciation of office equipment for April is $400. - (d) Accrued receptionist salary on April 30 is $275.
- (e) Rent expired during April is $2,000.
- (f) Unearned fees on April 30 are $2,350.
- 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet.
- 6. Journalize and post the
adjusting entries . Record the adjusting entries on Page 3 of the journal. - 7. Prepare an adjusted trial balance.
- 8. Prepare an income statement, a statement of stockholders’ equity, and a
balance sheet . - 9. Prepare and
post the closing entries. Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. - 10. Prepare a post-closing trial balance.
1 and 2.
Journalize the transactions of April in a two column journal beginning on page 1 and the following in page 2.
Explanation of Solution
Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Journalize the transactions of April in a two column journal beginning on page 1.
Journal Page 1 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
20Y6 | Cash | 11 | 20,000 | ||
April | 1 | Accounts receivable | 12 | 14,700 | |
Supplies | 14 | 3,300 | |||
Office equipment | 18 | 12,000 | |||
Common stock | 31 | 50,000 | |||
(To record the receipt of assets) | |||||
1 | Prepaid Rent | 15 | 6,000 | ||
Cash | 11 | 6,000 | |||
(To record the payment of rent) | |||||
2 | Prepaid insurance | 16 | 4,200 | ||
Cash | 11 | 4,200 | |||
(To record the payment of insurance premium) | |||||
4 | Cash | 11 | 9,400 | ||
Unearned fees | 23 | 9,400 | |||
(To record the cash received for the service yet to be provide) | |||||
5 | Office equipment | 18 | 8,000 | ||
Accounts payable | 21 | 8,000 | |||
(To record the purchase of supplies of account) | |||||
6 | Cash | 11 | 11,700 | ||
Accounts receivable | 12 | 11,700 | |||
(To record the cash received from clients) | |||||
10 | Miscellaneous expense | 59 | 350 | ||
Cash | 11 | 350 | |||
(To record the payment made for Miscellaneous expense) | |||||
12 | Accounts payable | 21 | 6,400 | ||
Office supplies | 11 | 6,400 | |||
(To record the payment made to creditors on account) | |||||
12 | Accounts receivable | 12 | 21,900 | ||
Fees earned | 41 | 21,900 | |||
(To record the revenue earned and billed) | |||||
14 | Salary Expense | 51 | 1,650 | ||
Cash | 11 | 1,650 | |||
(To record the payment made for salary) |
Table (1)
Journal Page 2 | |||||
Date | Description | Post. Ref | Debit ($) | Credit ($) | |
20Y6 | Cash | 11 | 6,600 | ||
April | 17 | Fees earned | 41 | 6,600 | |
(To record the receipt of cash) | |||||
18 | Supplies | 14 | 725 | ||
Cash | 11 | 725 | |||
(To record the payment made for automobile expense) | |||||
20 | Accounts receivable | 12 | 16,800 | ||
Fees earned | 41 | 16,800 | |||
(To record the payment of advertising expense) | |||||
24 | Cash | 11 | 4,450 | ||
Fees earned | 41 | 4,450 | |||
(To record the cash received from client for fees earned) | |||||
26 | Cash | 11 | 26,500 | ||
Accounts receivable | 12 | 26,500 | |||
(To record the cash received from clients) | |||||
27 | Salary expense | 51 | 1,650 | ||
Cash | 11 | 1,650 | |||
(To record the payment of salary) | |||||
29 | Miscellaneous Expense | 59 | 540 | ||
Cash | 11 | 540 | |||
(To record the payment of telephone charges) | |||||
31 | Miscellaneous Expense | 59 | 760 | ||
Cash | 11 | 760 | |||
(To record the payment of electricity charges) | |||||
31 | Cash | 11 | 5,160 | ||
Fees earned | 41 | 5,160 | |||
(To record the cash received from client for fees earned) | |||||
31 | Accounts receivable | 12 | 2,590 | ||
Fees earned | 41 | 2,590 | |||
(To record the revenue earned and billed) | |||||
31 | Dividends | 33 | 18,000 | ||
Cash | 11 | 18,000 | |||
(To record the dividends made for personal use) |
Table (2)
2, 6 and 9.
Record the balance of each account in the appropriate balance column of a four-column account and post them to the ledger.
Explanation of Solution
T-account: The condensed form of a ledger is referred to as T-account. The left-hand side of this account is known as debit, and the right hand side is known as credit.
Account: Cash Account no. 11 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 1 | 1 | 20,000 | 20,000 | |||
1 | 1 | 6,000 | 14,000 | ||||
2 | 1 | 4,200 | 9,800 | ||||
4 | 1 | 9,400 | 19,200 | ||||
6 | 1 | 11,700 | 30,900 | ||||
10 | 1 | 350 | 30,550 | ||||
12 | 1 | 6,400 | 24,150 | ||||
14 | 1 | 1,650 | 22,500 | ||||
17 | 2 | 6,600 | 29,100 | ||||
18 | 2 | 725 | 28,375 | ||||
24 | 2 | 4,450 | 32,825 | ||||
26 | 2 | 26,500 | 59,325 | ||||
27 | 2 | 1,650 | 57,675 | ||||
29 | 2 | 540 | 57,135 | ||||
31 | 2 | 760 | 56,375 | ||||
31 | 2 | 5,160 | 61,535 | ||||
31 | 2 | 18,000 | 43,535 |
Table (3)
Account: Accounts Receivable Account no. 12 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 1 | 1 | 14,700 | 14,700 | |||
6 | 1 | 11,700 | 3,000 | ||||
12 | 1 | 21,900 | 24,900 | ||||
20 | 2 | 16,800 | 41,700 | ||||
26 | 2 | 26,500 | 15,200 | ||||
31 | 2 | 2,590 | 17,790 |
Table (4)
Account: Supplies Account no. 14 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 1 | 1 | 3,300 | 3,300 | |||
18 | 2 | 725 | 4,025 | ||||
31 | Adjusting | 3 | 2,800 | 1,225 |
Table (5)
Account: Prepaid Rent Account no. 15 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 1 | 1 | 6,000 | 6,000 | |||
31 | Adjusting | 3 | 2,000 | 4,000 |
Table (6)
Account: Prepaid Insurance Account no. 16 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 2 | 1 | 4,200 | 4,200 | |||
31 | Adjusting | 3 | 350 | 3,850 |
Table (7)
Account: Office equipment Account no. 18 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 1 | 1 | 12,000 | 12,000 | |||
5 | 1 | 8,000 | 20,000 |
Table (8)
Account: Accumulated Depreciation-Office equipment Account no. 19 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 31 | Adjusting | 3 | 400 | 400 |
Table (9)
Account: Accounts Payable Account no. 21 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 5 | 1 | 8,000 | 8,000 | |||
12 | 1 | 6,400 | 1,600 |
Table (10)
Account: Salaries Payable Account no. 22 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 31 | Adjusting | 3 | 275 | 275 |
Table (11)
Account: Unearned Fees Account no. 23 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 4 | 1 | 9,400 | 9,400 | |||
31 | Adjusting | 3 | 7,050 | 2,350 |
Table (12)
Account: Common Stock Account no. 31 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 1 | 1 | 50,000 | 50,000 |
Table (13)
Account: Retained earnings Account no. 32 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 1 | 0 | |||||
31 | Closing | 4 | 53,775 | 53,775 | |||
31 | Closing | 4 | 18,000 | 35,775 |
Table (14)
Account: Dividends Account no. 33 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 31 | 2 | 18,000 | 18,000 | |||
31 | Closing | 4 | 18,000 |
Table (15)
Account: Fees earned Account no. 41 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 12 | 1 | 21,900 | 21,900 | |||
17 | 2 | 6,600 | 28,500 | ||||
20 | 2 | 16,800 | 45,300 | ||||
24 | 2 | 4,450 | 49,750 | ||||
31 | 2 | 5,160 | 54,910 | ||||
31 | 2 | 2,590 | 57,500 | ||||
31 | Adjusting | 3 | 7,050 | 64,500 | |||
31 | Closing | 4 | 64,500 |
Table (16)
Account: Salary expense Account no. 51 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 14 | 1 | 1,650 | 1,650 | |||
27 | 2 | 1,650 | 3,300 | ||||
31 | Adjusting | 3 | 275 | 3,575 | |||
31 | Closing | 4 | 3,575 |
Table (17)
Account: Rent expense Account no. 52 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 31 | Adjusting | 3 | 2,000 | 2,000 | ||
31 | Closing | 4 | 2,000 |
Table (18)
Account: Supplies expense Account no. 53 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 31 | Adjusting | 3 | 2,800 | 2,800 | ||
31 | Closing | 4 | 2,800 |
Table (19)
Account: Depreciation expense Account no. 54 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 31 | Adjusting | 3 | 400 | 400 | ||
31 | Closing | 4 | 400 |
Table (20)
Account: Insurance expense Account no. 54 | ||||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | |||
Debit ($) | Credit ($) | |||||||
20Y6 | ||||||||
April | 31 | Adjusting | 3 | 350 | 350 | |||
31 | Closing | 4 | 350 |
Table (21)
Account: Miscellaneous expense Account no. 59 | |||||||
Date | Item | Post. Ref |
Debit ($) | Credit ($) | Balance | ||
Debit ($) | Credit ($) | ||||||
20Y6 | |||||||
April | 10 | 1 | 350 | 350 | |||
29 | 2 | 540 | 890 | ||||
31 | 2 | 760 | 1,650 | ||||
31 | Closing | 4 | 1,650 |
Table (22)
3.
Prepare an unadjusted trial balance for Company.
Explanation of Solution
Unadjusted trial balance:
Unadjusted trial balance is that statement which contains complete list of accounts with their unadjusted balances. This statement is prepared at the end of every financial period.
Prepare an unadjusted trial balance for Company.
Company RC | |||
Unadjusted Trial Balance | |||
As of April 31, 20Y6 | |||
Account titles | Account No. | Debit balances | Credit balances |
Cash | 11 | 43,535 | |
Accounts Receivable | 12 | 17,790 | |
Supplies | 14 | 4,025 | |
Prepaid Rent | 15 | 6,000 | |
Prepaid Insurance | 16 | 4,200 | |
Office Equipment | 18 | 20,000 | |
Accumulated Depreciation | 19 | 0 | |
Accounts Payable | 21 | 1,600 | |
Salaries Payable | 22 | 0 | |
Unearned Fees | 23 | 9,400 | |
Common Stock | 31 | 50,000 | |
Retained Earnings | 32 | 0 | |
Dividends | 33 | 18,000 | |
Fees Earned | 41 | 57,500 | |
Salary Expense | 51 | 3,300 | |
Rent Expense | 52 | 0 | |
Supplies Expense | 53 | 0 | |
Depreciation Expense | 54 | 0 | |
Insurance Expense | 55 | 0 | |
Miscellaneous Expense | 59 | 1,650 | |
Totals | $118,500 | $118,500 |
Table (23)
5.
Enter the unadjusted trial balance on an end of period spreadsheet and complete the spread sheet.
Explanation of Solution
Spreadsheet: A spreadsheet is a worksheet. It is used while preparing a financial statement. It is a type of form having multiple columns and it is used in the adjustment process. The use of a worksheet is optional for any organization. A worksheet can neither be considered as a journal nor a part of the general ledger.
Prepare the end of period spreadsheet and enter the unadjusted trial balance:
Table (24)
6.
Journalize the adjusting entries of Company RC for April 31.
Explanation of Solution
Adjusting entries:
Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).
Prepare the adjusting entries:
Date | Accounts title and explanation | Post Ref. |
Debit ($) |
Credit ($) | |
20Y6 | Insurance expense | 55 | 350 | ||
April | 31 | Prepaid insurance | 16 | 350 | |
(To record the insurance expense for April) | |||||
31 | Supplies expense | 53 | 2,800 | ||
Supplies | 14 | 2,800 | |||
(To record the supplies expense) | |||||
31 | Depreciation expense | 54 | 400 | ||
Accumulated Depreciation | 19 | 400 | |||
(To record the depreciation and the accumulated depreciation) | |||||
31 | Salaries expense | 51 | 275 | ||
Salaries payable | 22 | 275 | |||
(To record the accrued salaries payable) | |||||
31 | Rent expense | 52 | 2,000 | ||
Prepaid rent | 15 | 2,000 | |||
(To record the rent expense for April) | |||||
31 | Unearned fees | 23 | 7,050 | ||
Fees earned | 41 | 7,050 | |||
(To record the receipt of unearned fees) |
Table (25)
7.
Prepare an adjusted trial balance of Company RC for April 31, 20Y6.
Explanation of Solution
Adjusted trial balance:
Adjusted trial balance is a summary of all the ledger accounts, and it contains the balances of all the accounts after the adjustment entries are journalized, and posted.
Prepare the adjusted trial balance:
Company RC | |||
Adjusted Trial Balance | |||
As of April 31, 20Y6 | |||
Account title | Account | Debit balances ($) | Credit balances ($) |
Cash | 11 | 43,535 | |
Accounts Receivable | 12 | 17,790 | |
Supplies | 14 | 1,225 | |
Prepaid Rent | 15 | 4,000 | |
Prepaid Insurance | 16 | 3,850 | |
Office Equipment | 18 | 20,000 | |
Accumulated Depreciation | 19 | 400 | |
Accounts Payable | 21 | 1,600 | |
Salaries Payable | 22 | 275 | |
Unearned Fees | 23 | 2,350 | |
Common Stock | 31 | 50,000 | |
Retained Earnings | 32 | 0 | |
Dividends | 33 | 18,000 | |
Fees Earned | 41 | 64,550 | |
Salary Expense | 51 | 3,575 | |
Rent Expense | 52 | 2,800 | |
Supplies Expense | 53 | 2,000 | |
Depreciation Expense | 54 | 400 | |
Insurance Expense | 55 | 350 | |
Miscellaneous Expense | 59 | 1,650 | |
Totals | $119,715 | $119,175 |
Table (26)
8.
Prepare an income statement for the year ended April 31, 20Y6.
Explanation of Solution
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Company RC | ||
Income Statement | ||
For the year ended April 31, 20Y6 | ||
Particulars | Amount ($) | Amount ($) |
Revenues: | ||
Fees Earned | 64,550 | |
Expenses: | ||
Salaries Expense | 3,575 | |
Rent Expense | 2,800 | |
Supplies Expense | 2,000 | |
Depreciation Expense- Building | 400 | |
Insurance Expense | 350 | |
Miscellaneous Expense | 1,650 | |
Total Expenses | (10,775) | |
Net Income | 53,775 |
Table (27)
Statement of stockholders’ equity: The statement which reports the changes in stock, paid-in capital, retained earnings, and treasury stock, during the year is referred to as statement of stockholders’ equity.
Prepare the statement of stockholders equity for the year ended April 31, 20Y6.
Company RC | |||
Statement of Stockholders’ Equity | |||
For the Month Ended April 31, 20Y6 | |||
Particulars | Common stock | Retained earnings | Total |
Beginning balances, April 1, 20Y6 | $0 | $0 | $0 |
Issued common stock | $50,000 | $50,000 | |
Net income | $0 | $53,775 | $53,775 |
Dividends | $0 | ($18,000) | ($18,000) |
Ending balances, April 31, 20Y6 | $50,000 | $35,775 | $85,775 |
Table (28)
Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.
Prepare the balance sheet as of April 31, 20Y6:
Company RC | ||
Balance Sheet | ||
As of April 31, 20Y6 | ||
Particulars | Amount ($) | Amount ($) |
Assets | ||
Current assets: | ||
Cash | 43,535 | |
Accounts receivable | 17,790 | |
Supplies | 1,225 | |
Prepaid rent | 4,000 | |
Prepaid insurance | 3,850 | |
Total current assets | 70,400 | |
Property, plant, and equipment: | ||
Office equipment | 20,000 | |
Accumulated depreciation | (400) | |
Total property, plant, and equipment | 19,600 | |
Total assets | $90,000 | |
Liabilities | ||
Current liabilities: | ||
Accounts payable | 1,600 | |
Salaries payable | 275 | |
Unearned fees | 2,350 | |
Total liabilities | 4,225 | |
Stockholders’ Equity | ||
Common stock | 50,000 | |
Retained earnings | 35,775 | |
Total stockholders’ equity | 85,775 | |
Total liabilities and stockholders’ equity | $90,000 |
Table (29)
9.
Journalize the closing entries for Company RC.
Explanation of Solution
Closing entry for revenue and expense accounts:
Date | Account title and explanation | Post. Ref. | Debit ($) | Credit ($) | |
20Y6 | |||||
April | 31 | Fees Earned | 41 | 64,550 | |
Salary Expense | 51 | 3,575 | |||
Rent Expense | 52 | 2,800 | |||
Supplies Expense | 53 | 2,000 | |||
Depreciation Expense | 54 | 400 | |||
Insurance Expense | 55 | 350 | |||
Miscellaneous Expense | 59 | 1,650 | |||
Retained Earnings (1) | 32 | 53,775 | |||
(To record the closing entry for revenue and expense account to retained earnings account) | |||||
20Y6 | 31 | Retained Earnings | 32 | 18,000 | |
April | Dividends | 33 | 18,000 | ||
(To record the closing entry for dividends account) |
Table (30)
Working note (1):
Calculate the amount of retained earnings account:
10.
Prepare a post–closing trial balance of D Consulting for the month ended April 31, 20Y6.
Explanation of Solution
Post-closing trial balance:
The post-closing trial balance is a summary of all ledger accounts, and it shows the debit and the credit balances after the closing entries are journalized and posted. The post-closing trial balance contains only permanent (balance sheet) accounts, and the debit and the credit balances of permanent accounts should agree.
Prepare a post–closing trial balance for the year ended April 31, 20Y6:
Company RC | |||
Post-Closing Trial Balance | |||
As of April 31, 20Y6 | |||
Account title | Account No. | Debit Balances | Credit Balances |
Cash | 11 | 43,535 | |
Accounts Receivable | 12 | 17,790 | |
Supplies | 14 | 1,225 | |
Prepaid Rent | 15 | 4,000 | |
Prepaid Insurance | 16 | 3,850 | |
Office Equipment | 18 | 20,000 | |
Accumulated Depreciation | 19 | 400 | |
Accounts Payable | 21 | 1,600 | |
Salaries Payable | 22 | 275 | |
Unearned Fees | 23 | 2,350 | |
Common Stock | 31 | 50,000 | |
Retained Earnings | 32 | 35,775 | |
Totals | $90,400 | $90,400 |
Table (31)
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Chapter 4 Solutions
Financial And Managerial Accounting
- Review the following transactions and prepare any necessary journal entries for Woodworking Magazine. Woodworking Magazine provides one issue per month to subscribers for a service fee of $240 per year. Assume January 1 is the first day of operations for this company, and no new customers join during the year. A. On January 1, Woodworking Magazine receives advance cash payment from forty customers for magazine subscription services. Handyman had yet to provide subscription services as of January 1. B. On April 30, Woodworking recognizes subscription revenues earned. C. On October 31, Woodworking recognizes subscription revenues earned. D. On December 31, Woodworking recognizes subscription revenues earned.arrow_forwardSage Learning Centers was established on July 20 to provide educational services. The services provided during the remainder of the month are as follows: Instructions 1. Journalize the transactions for July, using a single-column revenue journal and a two-column general journal. Post to the following customer accounts in the accounts receivable ledger and insert the balance immediately after recording each entry: D. Chase; J. Dunlop; F. Mintz; T. Quinn; K. Tisdale. 2. Post the revenue journal and the general journal to the following accounts in the general ledger, inserting the account balances only after the last postings: 3. a. What is the sum of the balances of the customer accounts in the subsidiary ledger at July 31? b. What is the balance of the accounts receivable controlling account at July 31? 4. Assume Sage Learning Centers began using a computerized accounting system to record the sales transactions on August 1. What are some of the benefits of the computerized system over the manual system?arrow_forwardFor the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 2016, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud Consulting entered into the following transactions during April: Instructions 1.Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 2.Post the journal to a ledger of four-column accounts. 3.Prepare an unadjusted trial balance. 4.At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during April is 350. b. Supplies on hand on April 30 are 1,225. c. Depreciation of office equipment for April is 400. d. Accrued receptionist salary on April 30 is 275. e. Rent expired during April is 2,000. f. Unearned fees on April 30 are 2,350. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owners equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forward
- Prepare journal entries to record the following transactions that occurred in March: A. on first day of the month, purchased building for cash, $75,000 B. on fourth day of month, purchased inventory, on account, $6,875 C. on eleventh day of month, billed customer for services provided, $8,390 D. on nineteenth day of month, paid current month utility bill, $2,000 E. on last day of month, paid suppliers for previous purchases, $2,850arrow_forwardSage Learning Centers was established on July 20, 2016, to provide educational services. The services provided during the remainder of the month are as follows: Instructions 1. Journalize the transactions for July, using a single-column revenue journal and a two-column general journal. Post to the following customer accounts in the accounts receivable ledger, and insert the balance immediately after recording each entry: D. Chase; J. Dunlop; F. Mintz; T. Quinn; K. Tisdale. 2. Post the revenue journal and the general journal to the following accounts in the general ledger, inserting the account balances only after the last postings: 3. a. What is the sum of the balances of the customer accounts in the subsidiary ledger at July 31? b. What is the balance of the accounts receivable controlling account at July 31? 4. Assume Sage Learning Centers began using a computerized accounting system to record the sales transactions on August 1. What are some of the benefits of the computerized system over the manual system?arrow_forwardEddie Edwards and Phil Bell own and operate The Second Hand Equipment Shop. The following transactions involving notes and interest were completed during the last three months or 20--: REQUIRED 1. Prepare general journal entries for the transactions. 2. Prepare necessary adjusting entries for the notes outstanding on December 31.arrow_forward
- Prepare journal entries to record the following transactions for the month of November: A. on first day of the month, issued common stock for cash, $20,000 B. on third day of month, purchased equipment for cash, $10,500 C. on tenth day of month, received cash for accounting services, $14,250 D. on fifteenth day of month, paid miscellaneous expenses, $3,200 E. on last day of month, paid employee salaries, $8,600arrow_forwardBrian Marlow recently was hired to prepare Louise Michenor Consulting’s year-end financial statements. Brain just entered his CPA certificate, and Louise Michneor was one of his first clients. Louise employs a bookkeeper, Martha Hailing, who does the daily journal entries and prepares a year-to-date trial balance at the end of the of each month. Martha gives the December 31 trial to a CPA to make adjustments and generate the financial statements. As Brian was looking through Louise Michenor’s books, he noticed two things. First, in each of the last three years, a different COA had prepared the financial statements. Second, the amount shown on the December 31 trial balance for miscellaneous expense was quite high this year compared to prior years. Brian called Martha to find out is she new why miscellaneous expense had such a high balance. Martha’s response was “ I just do what Louise tells me to do. If she wants to charge personal expenses to the company, it’s none of my business “.…arrow_forwardMr X enrolls in a 12-month customer service assistance program for a computer software from CYBER COMPANY costing P1,200 per month on August 1, 20x8. Given that the computer assistance occurs evenly throughout the year, CYBER COMPANY uses the “proportion of time” as its measure for membership revenue, what is the amount of sales revenue to be recognized on December 31?arrow_forward
- As a bookkeeper of a new start-up company, you are responsible for keeping the chart of accounts up to date. At the end of each year, you analyze the accounts to verify that each account should be active for accumulation of costs, revenues and expenses. In July, the accounts payable clerk has asked you to open an account named “New Expenses”. You know that an account name should be specific and well defined. You feel that the A/P clerk might want to charge some expenses to that account that would not be appropriate. Why do you think the A/P clerk need this “New Expenses” account? Who needs to know this information and what action should you consider?arrow_forwardSALES TRANSACTIONS J. K. Bijan owns a retail business and made the following sales on account during the month of August 20--. There is a 6% sales tax on all sales. REQUIRED 1. Record the transactions starting on page 15 of a general journal. 2. Post from the journal to the general ledger and accounts receivable ledger accounts. Use account numbers as shown in the chapter.arrow_forwardYour assistant has just completed a rough draft of Form 941, shown on pages 3-72 and 3-73, for the quarter ending March 31, 20--. As the supervisor and authorized signer, you are auditing the form before it is mailed to ensure its accuracy. Four of the companys general ledger accounts are shown on the following two pages. The companys 17 employees are paid on the 15th and last day of each month. The company is a semiweekly depositor. Indicate any changes that should be made on the form before it is signed, dated, and mailed.arrow_forward
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