summary of the May transactions.

summary of the May transactions.

Problems: Set B

P3-1B Hyman Inc. was started on May 1. Here is a summary of the May transactions.

  1. Stockholders invested $30,000 cash in the company in exchange for common stock.
  2. Purchased equipment for $10,000 cash.
  3. Paid $700 cash for May office rent.
  4. Paid $300 cash for supplies.
  5. Purchased $750 of advertising in the Evening Times on account.
  6. Received $8,000 in cash from customers for service.
  7. Paid a $500 cash dividend.
  8. Paid part-time employee salaries $1,000.
  9. Paid utility bills $140.
  10. Performed service on account to customers $2,000.
  11. Collected cash of $1,000 for services billed in transaction (10).

Instructions

(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.

Instructions

(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.

Assets

=

Liabilities

+

Stockholders’ Equity

Date

Cash

+

Accounts

+

Supplies

+

Equipment

=

Notes

+

Accounts

+

Common

+

Retained Earnings

Receivable

Payable

Payable

Stock

Revenues

(

Expenses

(

Dividends

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.

Instructions

(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.

Instructions

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.

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