Chapter 8, Problem 2COMP

1.

To determine

Pass necessary journal entries to record the transactions.

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.

Accounting rules for Journal entries:

• To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
• To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Pass necessary journal entries to record the transactions.

Table (2)

Table (2)

2.

To determine

Prepare T accounts using the trial balance information and an adjusted trial balance.

Explanation of Solution

Prepare T accounts using the trial balance information and an adjusted trial balance.

Cash
Beginning balance   570
a.                        97
f.2                                3	e.       4
Ending balance       666

Table (3)

Accounts Receivable
Beginning balance   373	b.     3
Ending balance       370

Table (3)

Allowance for doubtful accounts
	Balance 570
b    3	c               6
	Balance 21

Table (3)

Inventories
Beginning balance   539	d. 169
Ending balance       370

Table (4)

Prepaid Expenses
Beginning balance   59
Ending balance       59

Table (5)

Land
Beginning balance   22
Ending balance       22

Table (6)

Building
Beginning balance   189
Ending balance       189

Table (7)

Equipment
Beginning balance   360 e.                        14	f.2.       20
Ending balance       354

Table (8)

Accumulated Depreciation
	Balance            222
	f.1.                       4
f.2                                16	h.                        21
	Balance       231

Table (9)

Software
Beginning balance   90	g. 30
Ending balance       60

Table (10)

Patents
Beginning balance        1
Ending balance             1

Table (11)

Goodwill
Beginning balance   161
Ending balance       161

Table (12)

Accounts Payable
	Balance            252
	e.                       10
	Balance            262

Table (13)

Accrued Liabilities
	Balance            182
	Balance            182

Table (14)

Income Tax Payable
	Balance              16
	i.                        33
	Balance            49

Table (15)

Long term Debt
	Balance            49
	Balance            49

Table (16)

Common Stock
	Balance               3
	Balance               3

Table (17)

Additional paid in capital
	Balance            243
	Balance            243

Table (18)

Retained Earnings
	Balance             1,107
	Balance             1,107

Table (19)

Sales Revenue
	Balance             2,847 a.                          100
	Balance             2,587

Table (20)

Credit Card Discounts
Beginning balance   53 a.                        3
Ending balance        56

Table (21)

Cost of sales
Beginning balance 1,306 d.                         169
Ending balance      1,475

Table (22)

Advertising Expense
Beginning balance   145
Ending balance        145

Table (23)

Utilities Expense
Beginning balance      85
Ending balance           85

Table (24)

Wages Expense
Beginning balance   625
Ending balance        625

Table (25)

Depreciation Expense
Beginning balance       0 f.1.                               4 h.                                21
Ending balance          25

Table (26)

Amortisation Expense
Beginning balance       0 g.                                30
Ending balance          30

Table (27)

Interest Expense
Beginning balance       1
Ending balance            1

Table (28)

Bad Debt Expense
Beginning balance       0  C                                 6
Ending balance            6

Table (28)

Loss of sale of equipment
Beginning balance       0 f.2.                                1
Ending balance            1

Table (29)

Income Tax Expense
Beginning balance       0 f.2.                             33
Ending balance         33

Table (30)

Table (31)

3.

To determine

Prepare an income statement, statement of stockholders’ equity and a classified balance sheet.

Explanation of Solution

Prepare an income statement for OS Inc.

Table (32)

Prepare a statement of stockholders’ equity for OS Inc.

Table (33)

Prepare a balance sheet for OS Inc.

Table (34)