E3-1B| (Transaction Analysis—Service Company) Brown is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. | | |
April| | |
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| 3| Purchased supplies on account $1,610.|
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| 11| Completed a tax assignment and billed client $2,530 for services rendered. | | 12| Received $7,360 advance on a management consulting engagement.| | 17| Received cash of $5,290 for services completed for Calunga Co.| | 21| Paid insurance expense $253.|
| 30| Owe the secretary-receptionist $2,668 for the month.| | 30| A count of supplies indicated that $276 of supplies had been used.| | 30| Purchased a new computer for $14,030|
(LO 4)|
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InstructionsJournalize the transactions in the general journal. (Omit explanations.)Problem #3| |
E3-3B | (Corrected Trial Balance) The trial balance of Cervantes Corporation, below, does not balance. | | |
CERVANTES CORPORATIONTRIAL BALANCEAPRIL 30, 2010| | Debit| Credit|
Cash| $11,824| |
Accounts Receivable| 10,480| |
Supplies on Hand| 5,934| |
Furniture and Equipment| 12,200| |
Accounts Payable| | $14,088|
Common Stock| | 16,000|
The Essay on Comprehensive Problem: Service Industry
Objectives: Demonstrate application of accounting concepts pertaining to a service company, including the following: selection of business form, journalization and posting of daily transactions, creation of unadjusted trial balance, adjustment of the accounts to properly report changes in balances, creation of financial statements, completion of the closing process with appropriate closing entries ...
Retained Earnings| | 4,000|
Service Revenue| | 10,400|
Office Expense| 8,640| |
| $49,078| $44,488|
An examination of the ledger shows these errors. | 1. | Cash received from a customer on account was recorded as $2,760 instead of $3,660.| |
2. | The purchase on account of a computer costing $6,400 was recorded as a debit to Office Expense and a credit to Accounts Payable.| |
3. | Services were performed on account for a client, $4,500, for which Accounts Receivable was debited $4,500 and Service Revenue was credited $450.| |
4. | A payment of $190 for telephone charges was entered as a debit to Office Expenses and a debit to Cash.| |
5. | The Service Revenue account was totaled at $10,400 instead of $10,560.|
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(LO 4)|
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InstructionsFrom this information prepare a corrected trial balanceProblem #4| |
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E3-5B | (Adjusting Entries) The ledger of Chan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. | | |
| Debit| Credit|
Prepaid Insurance| $ 2,700| |
Supplies| 2,100| |
Equipment| 18,750| |
Accumulated Depreciation—Equipment| | $ 6,300|
Notes Payable| | 15,000|
Unearned Rent Revenue| | 6,975|
Rent Revenue| | 45,000|
Interest Expense| –0– | |
Wage Expense| 10,500| |
An analysis of the accounts shows the following. | 1. | The equipment depreciates $188 per month.| |
2. | One-third of the unearned rent was earned during the quarter.| |
3. | Interest of $375 is accrued on the notes payable.| |
4. | Supplies on hand total $637.|
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5. | Insurance expires at the rate of $225 per month.|
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(LO 5)|
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InstructionsPrepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense; Insurance Expense; Interest Payable; and Supplies Expense.| |
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Problem # 5 | |
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E3-8B | (Adjusting Entries) Dement is the new owner of Fung Computer Services. At the end of August 2010, his first month of ownership, Dement is trying to prepare monthly financial statements. Below is some information
The Essay on The Travel Expense Billing Controversy and False Claims Act
PricewaterhouseCoopers LLP (PwC), a major accounting firm, was engaged in unethical billing practices that generated millions of dollars in additional revenue to the company. PwC was charging its clients the full price of airline tickets and other travel expenses, such as hotel rooms and car rentals, while it was actually expending only a small percentage of the full amount billed to its clients ...
related to unrecorded expenses that the business incurred during August. | 1. | At August 31, Dement owed his employees $2,280 in wages that will be paid on September 1.| |
2. | At the end of the month he had not yet received the month’s utility bill. Based on past experience, he estimated the bill would be approximately $720.| |
3. | On August 1, Dement borrowed $36,000 from a local bank on a 15-year mortgage. The annual interest rate is 6%.| |
4. | A telephone bill in the amount of $140 covering August charges is unpaid at August 31.5.During August, Dement earned $1000 of $6000 that was received from a client at the end of July.|
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(LO 5)|
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InstructionsInstructionsPrepare the adjusting journal entries as of August 31, 2010, suggested by the information above.| |
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