Selling shared of common stock to investors

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Reference no: EM13854613

1. Using the following transactions, calculate (A) the ending balance of Cash, (B) the ending balance of Accounts Receivable, (C) total liabilities, and (D) Stockholders' Equity at the end of the period. For parts a, b, and d, indicate whether each balance is debit or credit.

a. Began doing business by selling shared of common stock to investors for $50,000 in cash.

b. Billed customers for services rendered, $10,000.

c. Paid for six months' subscription in advance, $2,500.

d. Received advertising bill, to be paid next week, $500

e. Dividends of $4,000 were paid to common stock holders.

f. Received $7,500 from customers billed in b.

g. Paid half of advertising bill.

h. Received $1,000 in advance of performing a service.

2. Using the alphabetical list of account balances presented below, all of which are normal, prepare a trial balance for Cookies and Cream Company at June 30, 20x5, in proper order. Compute the balance of the Cash account.

Accounts Payable

$280

Accounts Receivable

560

Cash

?

Equipment

800

Office Expense

360

Common Stock

880

Service Revenue

600

3. In the journal provided, prepare journal entries without explanations for the following transactions. Write "no entry" if none is needed.

a. Received a $1,000 invoice for this month's electricity. Payment will be made in 2 weeks.

b. Paid $1,200 for insurance premiums to cover the next six months.

c. Dividends of $700 were paid.

d. The utility bill from part "a" is paid.

e. Purchased land for $23,000. The company paid half in cash and issued a promissory note for the other half.

General Journal

Page 1

Date

Description

Post.

Ref.

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. In the journal provided, prepare adjusting entries for the following items. Omit explanations.

a. Depreciation on machinery is $940 for the accounting period.

b. Interest incurred on a loan but not paid or recorded is $635.

c. Office supplies of $600 were on hand at the beginning of the period. Purchases of office supplies during the period totaled $200. At the end of the period, $80 in office supplies remained.

d. Commissions amounting to $540 were earned but not recorded or collected by year end.

e. Prepaid Rent had an $8,000 normal balance prior to adjustment. By year end, 40 percent had expired.

General Journal

Page 1

Date

Description

Post.

Ref.

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5. In the journal provided, prepare adjusting entries for the following items. Omit explanations.

a. Unrecorded interest on savings bonds is $680.

b. Property taxes incurred but not paid or recorded amount to $540.

c. Legal fees of $5,000 were collected in advance. By year end, 60 percent were still unearned.

d. Prepaid Insurance had a $1,600 debit balance prior to adjustment. By year end, 40 percent was still unexpired.

e. Salaries incurred by year end but not yet paid or recorded amounted to $1,375.

f. Services totaling $900 have been performed but not yet recorded or billed.

General Journal

Page 1

Date

Description

Post.

Ref.

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.    Given the adjusted trial balance below, prepare (in good form) an income statement, statement of retained earnings, and balance sheet. To do so you will need to determine the missing amounts for A, B, C, and D.  The name of the business is Oak Manufacturing and the accounting period coincides with the calendar year.  The balance in the Retained Earnings account as of December 31, 20X5 is $6,600.

Oak Manufacturing

Adjusted Trial Balance

December 31, 20x5

Cash

$   1,590

 

Accounts Receivable

3,600

 

Supplies

60

 

Prepaid Insurance

60

 

Office Equipment

6,000

 

Accumulated Depreciation-Office Equipment

 

$ "B"

Accounts Payable

 

1,600

Salaries Payable

 

210

Common Stock

 

2,000

Retained Earnings

 

"D"

Service Revenue

 

6,600

Salaries Expense

"A"

 

Supplies Expense

240

 

Insurance Expense

300

 

Depreciation Expense-Office Equipment

       300

______

 

$"C"

$15,510

7. Using the following data, prepare a classified balance sheet for Blanchard Company as of December 31, 20x5.

Cash

$   200

 

Accumulated Depreciation- Building

 

$  1,000

Investments in Short-Term Government Securities

400

 

Franchise

1,800

Accounts Receivable

800

 

Accounts Payable

1,600

Inventory

3,000

 

Revenues Received in Advance

400

Prepaid Rent

100

 

Notes Payable (in two years)

4,000

Investment in Land Held for future use

2,700

 

Common Stock

12,000

Land

2,000

 

 

 

Building

8,000

 

 

 

8. Use the information from the following single-step income statement to prepare a multistep income statement in proper form.

Midway Industries

Income Statement

For the Year Ended December 31, 20x5

Revenues

 

Net sales

$10,000

 

 

Interest income

      300

 

 

Total revenues

 

               $10,300

 

 

 

 

Costs and expenses

 

Costs of goods sold

$ 5,000

 

 

Selling expenses

3,000 

 

 

General and administrative expenses

1,800

 

 

Interest expense

      800

 

 

Total costs and expense

 

    10,600

Net income (loss)

 

 ($     300)






9. Highland, Inc. entered into the transactions listed below. In the journal provided, prepare Highland's entries, assuming use of the perpetual inventory system. Omit explanations.

Mar.

  2

Purchased $450 of merchandise on credit, terms n/30.

 

  6

Returned $75 of the items purchased on March 2.

 

  8

Paid freight charges of $25 on the items purchased March 2.

 

16

Sold merchandise on credit for $600, terms n/15. The merchandise had a cost in inventory of $375.

 

17

Of the merchandise sold on March 16, $50 of it was returned. The items had cost to Highland of $15.

 

25

Received payment in full from the customer of March 16.

 

31

Paid for the merchandise purchased on March 2.

General Journal

Page 1

Date

Description

Post.

Ref.

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10. Given the following information, prepare in good form the cost of goods sold section of an income statement for 20x5.

Freight-In

$  4,000

Merchandise Inventory, December 31, 20x4

15,000

Merchandise Inventory, December 31, 20x5

16,000

Purchases

38,000

Purchases Returns and Allowances

1,800

Reference no: EM13854613

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