Problem
Anthony Asher's administrative assistant maintains a very simple computerized general ledger system. This system includes intuitive routines for recording receipts, payments, and sales on account. However, the system is not sufficiently robust to automate end-of-period adjustments. Below is the trial balance for the month ending January 31, 20X8. This trial balance has not been adjusted for the various items that are described below. Review the trial balance and narratives, and prepare the necessary adjusting entries. | |||||
Asher Corporation | |||||
Trial Balance | |||||
January 31, 20X8 | |||||
Debits | Credits | ||||
Cash | $ 37,500 | $ - | |||
Accounts receivable | 12,410 | - | |||
Prepaid insurance | 2,400 | - | |||
Supplies | 7,113 | - | |||
Equipment | 35,000 | - | |||
Accumulated depreciation | - | 10,000 | |||
Accounts payable | - | 7,569 | |||
Unearned revenue | - | 8,500 | |||
Loan payable | - | 15,000 | |||
Capital stock | - | 24,000 | |||
Retained earnings, Jan. 1 | - | 15,457 | |||
Revenues | - | 43,995 | |||
Salary expense | 12,098 | - | |||
Rent expense | 13,000 | - | |||
Office expense | 2,500 | - | |||
Dividends | 2,500 | - | |||
$ 124,521 | $ 124,521 | ||||
Asher Corporation's equipment had an original life of 140 months, and the straight-line depreciation method is used. As of January 1, the equipment was 40 months old. The equipment will be worthless at the end of its useful life. As of the end of the month, Asher Corporation has provided services to customers for which the earnings process is complete. Formal billings are normally sent out on the first day of each month for the prior month's work. January's unbilled work is $25,000. Utilities used during January, for which bills will soon be forthcoming from providers, are estimated at $1,500. A review of supplies on hand at the end of the month revealed items costing $3,500. The $2,400 balance in prepaid insurance was for a 6-month policy running from January 1 to June 30. The unearned revenue was collected in December of 20X7. 60% of that amount was actually earned in January, with the remainder to be earned in February. The loan accrues interest at 1% per month. No interest was paid in January. |
&R&"Myriad Web Pro,Bold"&20B-03.08
B-03.08
Worksheet
GENERAL JOURNAL | |||||
Date | Accounts | Debit | Credit | ||
31-Jan | |||||
31-Jan | |||||
31-Jan | |||||
31-Jan | |||||
31-Jan | |||||
31-Jan | |||||
31-Jan |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-03.08
B-03.08
Problem
Mo Lambert formed a corporation to provide concrete construction work. His jobs typically involve building parking lots, drives, and foundations. Mo provided the following information about transactions occurring during the first month of operation. Evaluate the transactions and prepare journal entries for this activity. | |
Jan. 2, 20X5 | Mo Lambert invested $10,000 cash in the capital stock of the newly formed corporation. |
Jan. 4, 20X5 | Purchased equipment on account for $7,500. |
Jan. 12, 20X5 | Received $15,000 from customers for services rendered. |
Jan. 15, 20X5 | Received a bill for construction supplies used in the amount of $2,000. |
Jan. 18, 20X5 | Provided $3,200 of services on account. |
Jan. 20, 20X5 | Paid employees $2,300 for wages earned. |
Jan. 22, 20X5 | Collected 60% of the amount due for the work provided on January 18. |
Jan. 23, 20X5 | Paid 40% of the amount due on the equipment purchased on January 4. |
Jan. 25, 20X5 | Purchased (and immediately used) construction supplies for cash in the amount of $600. |
Jan. 31, 20X5 | The company paid Mo Lambert a $1,500 dividend. |
&R&"Myriad Web Pro,Bold"&20B-02.03
B-02.03
Worksheet
GENERAL JOURNAL | Page 1 | ||||
Date | Accounts | Debits | Credits | ||
1-2-X5 | |||||
1-4-X5 | |||||
1-12-X5 | |||||
1-15-X5 | |||||
1-18-X5 | |||||
1-20-X5 | |||||
1-22-X5 | |||||
GENERAL JOURNAL | Page 2 | ||||
Date | Accounts | Debits | Credits | ||
1-23-X5 | |||||
1-25-X5 | |||||
1-31-X5 |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-02.03
B-02.03
Problem
The CEO of newly formed Targus Company printed a copy of the company's general ledger prior to a recent plane flight. She settled into seat 7A next to where you were sitting. Once airborne, she removed the printed "GL" from her brief case and began examining the report. Unfortunately, she realized that her printer had run out of ink on the very last page. She is frustrated because she is not able to determine the company's exact profitability to date, and is on her way to a shareholder meeting where she is to issue a report on the company's progress. She happened to note that you were studying an accounting book, and asked if you might help her. Prepare a trial balance from the general ledger, determine the missing amount for salaries expense, and determine the company's profit for its first month. | |||||||
CASH | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | Balance forward | - | - | - | |||
03-Jan-X8 | Journal Page 1 | 250,000 | - | 250,000 | |||
10-Jan-X8 | Journal Page 1 | - | 75,000 | 175,000 | |||
14-Jan-X8 | Journal Page 1 | - | 15,000 | 160,000 | |||
18-Jan-X8 | Journal Page 2 | 40,000 | - | 200,000 | |||
21-Jan-X8 | Journal Page 2 | 4,000 | 196,000 | ||||
26-Jan-X8 | Journal Page 2 | 3,000 | 193,000 | ||||
31-Jan-X8 | Journal Page 2 | 26,000 | - | 219,000 | |||
ACCOUNTS RECEIVABLE | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | Balance forward | - | - | - | |||
06-Jan-X8 | Journal Page 1 | 55,000 | - | 55,000 | |||
18-Jan-X8 | Journal Page 2 | - | 40,000 | 15,000 | |||
LAND | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | Balance forward | - | - | - | |||
10-Jan-X8 | Journal Page 1 | 75,000 | - | 75,000 | |||
SALARIES PAYABLE | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | Balance forward | - | - | - | |||
31-Jan-X8 | Journal Page 2 | - | 18,000 | 18,000 | |||
CAPITAL STOCK | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | Balance forward | - | - | - | |||
03-Jan-X8 | Journal Page 1 | - | 250,000 | 250,000 | |||
REVENUES | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | - | - | - | ||||
06-Jan-X8 | Journal Page 1 | - | 55,000 | 55,000 | |||
31-Jan-X8 | Journal Page 2 | - | 26,000 | 81,000 | |||
SUPPLIES EXPENSE | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | - | - | - | ||||
26-Jan-X8 | Journal Page 2 | 3,000 | - | 3,000 | |||
UTILITIES EXPENSE | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | - | - | - | ||||
21-Jan-X8 | Journal Page 2 | 4,000 | - | 4,000 | |||
SALARIES EXPENSE | |||||||
Date | Description | Debit | Credit | Balance | |||
02-Jan-X8 | - | - | - | ||||
14-Jan-X8 | Journal Page 1 | 15,000 | |||||
31-Jan-X8 | Journal Page 2 |
&R&"Myriad Web Pro,Bold"&20B-02.06
B-02.06
Worksheet
Debits | Credits | |||
Cash | $ 219,000 | |||
Accounts receivable | - | |||
Land | ||||
Salaries payable | ||||
Capital stock | ||||
Revenues | ||||
Supplies expense | ||||
Utilities expense | ||||
Salaries expense | ||||
$ 219,000 | $ - |
&L&"Myriad Web Pro,Bold"&12Name:
Date: Section: &R&"Myriad Web Pro,Bold"&20B-02.06
B-02.06
You can draw data from another worksheet -- in this case the amount appearing in cell C4 is "linked" to the amount on the "Problem" sheet in cell "G12". Click in C4 and note the reference system (=Problem!G12).
You should experiment with this process for the other trial balance amounts.
This is an excellent exercise to learn about the Goal Seek function available in the "tools menu."
Complete the entire trial balance (except for the missing amount in cell C12). Then, execute the goal seek function. Fill in the missing values in the goal seek pop-up box so that it instructs your computer to change C12 so that it sets C13 to equal the value of total credits ($349,000 in this problem).

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