Here is a summary of the May transactions.
(a) Prepare a tabular analysis of the transactions using these column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Common Stock, and Retained Earnings (with separate columns for Revenues, Expenses, and Dividends). Revenue is called Service Revenue. Include margin explanations for any changes in Retained Earnings.
(b) From an analysis of the Retained Earnings columns, compute the net income or net loss for May.
P3-2B Ned Walz started his own delivery service, Walz Service Inc., on June 1, 2014. The following transactions occurred during the month of June.
June 1 Stockholders invested $20,000 cash in the business in exchange for common stock.
2 Purchased a used van for deliveries for $10,000. Walz paid $2,000 cash and signed a note payable for the remaining balance.
3 Paid $600 for office rent for the month.
5 Performed $3,000 of services on account.
9 Paid $300 in cash dividends.
12 Purchased supplies for $240 on account.
15 Received a cash payment of $1,000 for services performed on June 5.
17 Received a bill for $200 to cover advertisements in Tri-State News.
20 Received a cash payment of $1,500 for services performed.
23 Made a cash payment of $1,000 on the note payable.
26 Paid $180 for utilities.
29 Paid for the supplies purchased on account on June 12.
30 Paid $750 for employee salaries.
(a) Show the effects of the previous transactions on the accounting equation using the following format. Assume the note payable is to be repaid within the year.
Include margin explanations for any changes in Retained Earnings.
(b) Prepare an income statement for the month of June.
(c) Prepare a classified balance sheet at June 30, 2014.
P3-3B Joe Thyme opened Thyme Company, a veterinary business in Neosho, Missouri, on August 1, 2014. On August 31, the balance sheet showed Cash $9,000; Accounts Receivable $1,700; Supplies $600; Equipment $5,000; Accounts Payable $3,600; Common Stock $10,000; and Retained Earnings $2,700. During September, the following transactions occurred.
Sept. 2 Paid $3,400 cash for accounts payable due.
5 Received $1,200 from customers in payment of accounts receivable.
8 Purchased additional office equipment for $5,100, paying $1,000 in cash and the balance on account.
13 Performed services worth $10,600, of which $2,300 is paid in cash and the balance is due in October.
17 Paid a $600 cash dividend.
22 Paid salaries $900, rent for September $1,100, and advertising expense $250.
26 Incurred utility expenses for the month on account $220.
30 Received $5,000 from Hilldale Bank on a 6-month note payable.
(a) Prepare a tabular analysis of the September transactions beginning with August 31 balances. The column headings should be: Cash + Accounts Receivable + Supplies + Equipment = Notes Payable + Accounts Payable + Common Stock + Retained Earnings + Revenues – Expenses – Dividends. Include margin explanations for any changes in Retained Earnings.
(b) Prepare an income statement for September, a retained earnings statement for September, and a classified balance sheet at September 30, 2014.
P3-4B Beefeaters RV Park was started on April 1 by Sarah Rhodes. These selected events and transactions occurred during April.
Apr. 1 Stockholders invested $100,000 cash in the business in exchange for common stock.
4 Purchased land costing $250,000 for cash.
8 Purchased advertising in local newspaper for $1,200 on account.
11 Paid salaries to employees $3,000.
12 Hired park manager at a salary of $3,600 per month, effective May 1.
13 Paid $7,200 for a 1-year insurance policy.
17 Paid $600 cash dividends.
20 Received $6,000 in cash from customers for admission fees.
25 Sold 100 coupon books for $90 each. Each book contains ten coupons that entitle the holder to one admission to the park. (Hint: The revenue should not be recognized until the coupons are used.)
30 Received $7,900 in cash from customers for admission fees.
30 Paid $400 of the balance owed for the advertising purchased on account on April 8.
The company uses the following accounts: Cash, Prepaid Insurance, Land, Accounts Payable, Unearned Service Revenue, Common Stock, Dividends, Service Revenue, Advertising Expense, and Salaries and Wages Expense.
Journalize the April transactions, including explanations. (Note: Beefeaters RV Park records admission revenue as service revenue.)
P3-5B Bob Royce incorporated Royce Consulting, an accounting practice, on May 1, 2014. During the first month of operations, these events and transactions occurred.
May 1 Stockholders invested $100,000 cash in exchange for common stock of the corporation.
2 Hired a secretary-receptionist at a salary of $2,500 per month.
3 Purchased $800 of supplies on account from Pickering Supply Company.
7 Paid office rent of $1,400 for the month.
11 Completed a tax assignment and billed client $2,500 for services performed.
12 Received $4,200 advance on a management consulting engagement.
17 Received cash of $3,300 for services completed for Woodman Co.
31 Paid secretary-receptionist $2,500 salary for the month.
31 Paid 50% of balance due Pickering Supply Company.
The company uses the following chart of accounts: Cash, Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue, Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expense.
(a) Journalize the transactions, including explanations.
(b) Post to the ledger T-accounts.
(c) Prepare a trial balance on May 31, 2014.
P3-6B The trial balance of American Dry Cleaners on June 30 is given here.
AMERICAN DRY CLEANERS
June 30, 2014
Accounts Receivable 10,536
Accounts Payable $15,800
Unearned Service Revenue 1,810
Common Stock 25,000
Retained Earnings 13,000
The July transactions were as follows.
July 8 Received $10,189 in cash on June 30 accounts receivable.
9 Paid employee salaries $2,100.
11 Received $7,320 in cash for services provided.
14 Paid creditors $4,810 of accounts payable.
17 Purchased supplies on account $720.
22 Billed customers for services provided $4,700.
30 Paid employee salaries $3,114, utilities $1,767, and repairs $386.
31 Paid $400 cash dividend.
(a) Prepare a general ledger using T-accounts. Enter the opening balances in the ledger accounts as of July 1. Provision should be made for the following additional accounts: Dividends, Service Revenue, Maintenance and Repairs Expense, Salaries and Wages Expense, and Utilities Expense.
(b) Journalize the transactions, including explanations.
(c) Post to the ledger accounts.
(d) Prepare a trial balance on July 31, 2014.
P3-7B This trial balance of Lindbergh Company does not balance.
May 31, 2014
Cash $ 5,340
Accounts Receivable $ 2,750
Prepaid Insurance 700
Accounts Payable 4,100
Income Taxes Payable 850
Common Stock 5,700
Retained Earnings 6,000
Service Revenue 7,690
Salaries and Wages Expense 4,200
Advertising Expense 1,100
Income Tax Expense 900
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