Question 1:
Net incone: $86,900
Preparing financial statements
Presented here are the accounts of Gate City Answering Service for the year ended
December 31, 2014.
Land $ 8,000 Owner contribution, 2014 $ 28,000
Notes Payable 32,000 Accounts Payable 11,000
Property Tax Expense 2,600 Accounts Receivable 1,000
Wayne, Withdrawals 30,000 Advertising Expense 15,000
Rent Expense 13,000 Building 145,200
Salaries Expens 65,000 Cash 3,000
Salaries Payable 1,300 Equipment 16,000
Service Revenue 192,000 Insurance Expense 2,500
Office Supplies 10,000 Interest Expense 7,000
Wayne, Capital, 12/31/13 54,000
Requirements
1. Prepare Gate City Answering Service's income statement.
2. Prepare the statement of owner's equity.
3. Prepare the balance sheet.
Question 2:
Total assests $19,425
Using the accounting equation for transaction analysis
Christopher Turner started a new business, Turner Gymnastics, and completed the
following transactions during December:
Dec. 1 Christopher contributed $21,000 cash in exchange for capital.
2 Received $3,500 cash from customers for services performed.
5 Paid $200 cash for office supplies.
9 Performed services for a customer and billed the customer for
services rendered, $2,000.
10 Received $300 bill for utilities due in two weeks.
15 Paid for advertising in the local paper, $325.
20 Paid utility bill received on Dec. 10.
25 Collected cash from customer billed on Dec. 9.
28 Paid rent for the month, $2,000.
28 Paid $1,250 to assistant for wages.
30 Received $1,800 cash from customers for services performed.
31 Christopher withdrew $5,000 cash from the business.
Analyze the effects of the transactions on the accounting equation of Turner Gymnastics using a format similar to Exhibit 1-4.
Querstion 3:
Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance
Vernon Yung practices medicine under the business title Vernon Yung, M.D. During July, the medical practice completed the following transactions:
Jul. 1 Yung contributed $68,000 cash to the business in exchange for capital.
5 Paid monthly rent on medical equipment, $560.
9 Paid $16,000 cash to purchase land to be used in operations.
10 Purchased office supplies on account, $1,600.
19 Borrowed $23,000 from the bank for business use. Yung signed a note
payable to the bank in the name of the business.
22 Paid $1,300 on account.
28 The business received a bill for advertising in the daily newspaper to be paid
in August, $240.
31 Revenues earned during the month included $6,500 cash and $5,800 on
account.
31 Paid employees' salaries $2,500, office rent $1,000, and utilities, $400.
Record as a compound entry.
31 The business received $1,140 for medical screening services to be performed
next month.
31 Yung withdrew cash of $7,000.
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies;
Land; Accounts Payable; Advertising Payable; Unearned Revenue; Notes Payable;
Yung, Capital; Yung, Withdrawals; Service Revenue; Salaries Expense; Rent Expense;
Utilities Expense; and Advertising Expense.
Requirements
1. Journalize each transaction. Explanations are not required.
2. Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts. Label the balance of each account Bal.
3. Prepare the trial balance of Vernon Yung, M.D. as of July 31, 2015.