P1-3B Shaws Garden was started on May 1 with an investment of $45,000 cash. Following are the assets, liabilities, and common stock of the company on May 31, 2014, and the revenues and expenses for the month of May, its first month of operations.
Accounts receivable $ 8,400 Notes payable $26,000
Service revenue 10,400 Salaries and wages expense 1,900
Advertising expense 1,800 Equipment 58,800
Accounts payable 4,400 Maintenance and repairs expense 2,100
Cash 10,800 Insurance expense 400
Common stock 45,000
No additional common stock was issued in May, but a dividend of $1,600 in cash was paid.
Instructions
(a) Prepare an income statement and a retained earnings statement for the month of May and a balance sheet at May 31, 2014.
(b) Briefly discuss whether the company first month of operations was a success.
(c) Discuss the company decision to distribute a dividend.
P3-4B Bee? eaters 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 ?or common stock.
4 Purchased land costing $250,000 ?or cash.
8 Purchased advertising in local newspaper ?or $1,200 on account.
11 Paid salaries to employees $3,000.
12 Hired park manager at a salary o? $3,600 per month, e??ective May 1.
13 Paid $7,200 ?or a 1-year insurance policy.
17 Paid $600 cash dividends.
20 Received $6,000 in cash ?rom customers ?or admission ?ees.
25 Sold 100 coupon books ?or $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 ?rom customers ?or admission ?ees.
30 Paid $400 o? the balance owed ?or the advertising purchased on account on
April 8.
The company uses the ?ollowing 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: Bee?eaters RV Park records admission revenue as service revenue.)
P4-4B AbDulla Advertising Agency was founded by Miriam AbDulla in January 2009. Presented here are both the adjusted and unadjusted trial balances as of December 31, 2014.
ABDULLA ADVERTISING AGENCY
Trial Balance
December 31, 2014
Unadjusted Adjusted
Dr. Cr. Dr. Cr.
Cash $ 11,000 $ 11,000
Accounts Receivable 16,000 19,000
Supplies 9,400 7,000
Prepaid Insurance 3,350 1,790
Equipment 60,000 60,000
Accumulated Depreciation
Equipment $ 25,000 $ 30,000
Notes Payable 8,000 8,000
Accounts Payable 2,000 2,000
Interest Payable 0 560
Unearned Service Revenue 5,000 3,100
Salaries and Wages Payable 0 820
Common Stock 20,000 20,000
Retained Earnings 5,500 5,500
Dividends 10,000 10,000
Service Revenue 57,600 62,500
Salaries and Wages Expense 9,000 9,820
Insurance Expense 1,560
Interest Expense 560
Depreciation Expense 5,000
Supplies Expense 2,400
Rent Expense 4,350 4,350
$123,100 $123,100 $132,480 $132,480
Instructions
(a) Journalize the annual adjusting entries that were made.
(b) Prepare an income statement and a retained earnings statement for the year ended
December 31, and a classified balance sheet at December 31.
(c) Identify which accounts should be closed on December 31.
(d) If the note has been outstanding 10 months, what is the annual interest rate on that ote?
(e) If the company paid $10,000 in salaries in 2014, what was the balance in Salaries and
Wages Payable on December 31, 2013?