Q1- Chart of accounts
Innerscape Interiors is owned and operated by Jackie Vargo, an interior decorator. In the ledger of Innerscape Interiors, the first digit of the account number indicates its major account classification (1-assets, 2-liabilities, 3-stockholders' equity, 4-revenues, 5-expenses). The second digit of the account number indicates the specific account within each of the preceding major account classifications.
Match each account number with its most likely account in the list that follows. The account numbers are 11, 12, 13, 21, 31, 32, 33, 41, 51, 52, and 53.
Accounts Payable Land
Accounts Receivable Miscellaneous Expense
Cash Retained Earnings
Common Stock Supplies Expense
Dividends Wages Expense
Fees Earned
Q2- Chart of accounts
LeadCo School is a newly organized business that teaches people how to inspire and influence others. The list of accounts to be opened in the general ledger is as follows:
Accounts Payable Prepaid Insurance
Accounts Receivable Rent Expense
Cash Retained Earnings
Common Stock Supplies
Dividends Supplies Expense
Equipment Unearned Rent
Fees Earned Wages Expense
Miscellaneous Expense
List the accounts in the order in which they should appear in the ledger of LeadCo School and assign account numbers. Each account number is to have two digits: the first digit is to indicate the major classification (1 for assets, etc.), and the second digit is to identify the specific account within each major classification (11 for Cash, etc.).
Q3- Journal entries and trial balance
On August 1, 2016, Bill Hudson established Heritage Realty, which completed the following transactions during the month:
a. Bill Hudson transferred cash from a personal bank account to an account to be used for the business in exchange for common stock,. $30,000.
b. Paid rent on office and equipment for the mouth, $3,250.
c. Purchased supplies on account, $2,150.
d. Paid creditor on account, $875.
e. Earned sales commissions, receiving cash, $14,440.
f. Paid automobile expenses (including rental charge) for month, $1,580, and miscellaneous expenses, $650.
g. Paid office salaries, $3,000.
h. Determined that the cost of supplies used was $1,300.
i. Paid dividends, $2,500.
Instructions-
1. Journalize entries for transactions (a) through (i), using the following account titles; Cash, Supplies, Accounts Payable, Common Stock, Dividends, Sales Commissions, Rent Expense, Office Salaries Expense, Automobile Expert , Supplies Expense, Miscellaneous Expense, Explanations may be omitted.
2. Prepare T accounts, using the account titles in (1). Post the journal entries to these accounts, placing the appropriate letter w the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance.
3. Prepare an unadjusted trial balance as of Augural 31, 2016.
4. Determine the following:
a. Amount of total revenue recorded in the ledger.
b. Amount of total expenses recorded in the ledger.
c. Amount of net income for August.
5. Determine the increase or decrease in retained earnings for August.
Q4- Journal entries and trial balance
On November 1, 2016, Patty Cosgrove established an interior decorating business, Classis Designs. During the month, Patty completed the following transactions related to the business:
Nov. 1. Patty transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $27,750.
1. Paid rent for period of November 1 to end cir month, $,4,000.
6. Purchased office equipment on account, $12,880.
8. Purchased a truck for $32,500 paying $6,500 cash and giving a note payable for the remainder.
10. Purchased supplies for cash, $1,860.
12. Received cash for job completed, $7,500.
15. Paid annual premiums on property and casualty insurance, $2,400,
23. Recorded jobs completed on account and sent invoices to customers, $12,440.
24. Received an invoice for truck expenses, to be paid in November, $1,100.
Enter the following transactions on Page 2 of the two-column journal:
29. Paid utilities expense, $3,660,
29. Paid miscellaneous expenses, $1,700.
30. Received cash from customers on account, $8,000.
30. Paid saes of employees, $4,750.
30. Paid creditor a portion of the amount owed for equipment purchased on November 6, $6,220.
30. Paid dividends, $2,000.
Instructions-
1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted.
11 Cash 31 Common Stock
12 Accounts Receivable 33 Dividends
13 Supplies 41 Fees Earned
14 Prepaid Insurance 51 Wages Expense
16 Equipment 53 Rent Expense
18 Truck 54 Utilities Expense
21 Notes Payable 55 Truck Expense
22 Accounts Payable 59 Miscellaneous Expense
2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted.
3. Prepare an unadjusted trial balance for Classic Designs as of November 30, 2016.
4. Determine the excess of revenues over expenses for November.
5. Can you think of any reason why the amount determined in (4) might not be the net income for November?
Q5. Accounting equation
The total assets and total liabilities (in millions) of Dollar Tree Inc. and Target Corporation follow:
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Dollar Tree
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Target Corporation
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Assets
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$2,329
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$46,630
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Liabilities
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984
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30,809
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Determine the stockholders' equity of each company.
Q6. Transactions and T accounts
The following selected transactions were completed during August of the current year:
1. Billed customers for fees earned, $73,900.
2. Purchased supplies on account, $1,960.
3. Received cash from customers on account, $62,770.
4. Paid creditors on account, $820.
a. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. Journal entry explanations may be omitted.
b. Post the entries prepared in (a) to the following T accounts: Cash, Supplies, accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, place the appropriate number to identify the transactions.
c. Assume that the unadjusted trial balance on August 31 shows a credit balance for Accounts Receivable. Does this credit balance mean an error has occurred?
Q7. Adjusting entries
On March 31, 2016, the following data were accumulated to assist the accountant in preparing the adjusting entries for Potomac Realty:
a. The supplies account balance on March 31 is $5,620. The supplies on hand on March 31 are $1,290.
b. The unearned rent account balance on March 31 is $5,000 representing the receipt of an advance payment on March 1 of four months' rent from tenants.
c. Wages accrued but not paid at March 31 are $2,290.
d. Fees accrued but unbilled at March 31 are $16,825.
e. Depredation of office equipment is $4,600.
Instructions-
1. Journalize the adjusting entries required at March 31, 2016.
2. Briefly explain the difference between adjusting entries and entries that would be made to correct errors.
Q8. Adjusting entries and adjusted trial balances
Rowland Company is a small editorial services company owned and operated by Marlene Rowland. On August 31, 2016, the end of the current year, Rowland Company's accounting clerk prepared the following unadjusted trial balance:
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Rowland Company Unadjusting Trial Balance August 31, 2016
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Debit Balance
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Credit Balance
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Cash
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7,500
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Accounts Receivable
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38,400
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Prepaid Insurance
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7,200
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Supplies
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1,980
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Land
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112,500
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Building
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150,250
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Accumulated Depreciation-Building
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87,550
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Equipment
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135,300
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Accumulated Depreciation-Equipment
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97,950
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Accounts payable
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12,150
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Unearned Rent
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6,750
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Common Stock
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75,000
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Retained Earnings
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146,000
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Dividends
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15,000
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Fees Earned
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324,600
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Salaries and Wages Expense
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193,370
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Utilities Expense
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42,375
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Repairs Expense
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22,800
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Repairs Expense
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17,250
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Miscellaneous Expense
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6,075
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750,000
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750,000
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The data needed, to determine year-end adjustments are as follows:
a. Unexpired insurance at August 31, $6,000.
b. Supplies on hand at August 31, $480.
c. Depreciation of building for the year, $7,500.
d. Depreciation of equipment for the year, $4,150.
e. Rent unearned at August 31, $1,550,
f. Accrued salaries and wages at August 31. $3,200.
g. Fees earned but unbilled on August 31, $11,330.
Instructions-
1. Journalize thy adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation Expense-Building Depreciation Expense--Equipment; and Supplies Expense.
2. Determine the balances of the accounts affected by the adjusting entries, and prepare an adjusted trial balance.