Acc290 Financial Accounting: Week 3 Assignment (BE4-1, P4-2A, P4-3A)

Acc290 Financial Accounting
Week 3 Assignment (BE4-1, P4-2A, P4-3A)

BE4-1 Transactions that affect earnings do not necessarily affect cash.
Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. (If an amount has a decreasing effect use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45). Do not use a dollar sign $ for negative answers.)
Purchased $100 of supplies for cash.
Recorded an adjusting entry to record use of $40 of the above supplies.
Made sales of $1,300 all on account.
Received $800 from customers in payment of their accounts.
Purchased capital asset for cash, $2,500.
Recorded depreciation of building for period used, $600.

Nick Waege started his own consulting firm, Waegelein Consulting, on June 1, 2010. The trial balance at June 30 is as follows.
Trial Balance
June 30, 2010
Debit Credit
Cash 6,850
Accounts Receivable 7,000
Prepaid Insurance 2,640
Supplies 2,000
Office Equipment 15,000
Accounts Payable 4,540
Unearned Service Revenue 5,200
Common Stock 21,750
Service Revenue 8,000
Salaries Expense 4,000
Rent Expense 2,000
39,490 39,490
In addition to those accounts listed on the trial balance, the chart of accounts for Waegelein also contains the following accounts: Accumulated Depreciation - Office Equipment, Utilities Payable, Salaries Payable, Depreciation Expense, Insurance Expense, Utilities Expense, Supplies Expense
Other data:
1 Supplies on hand at June 30 total $980.
2. A utility bill for $180 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $3,900 of unearned service revenue has been earned at the end of the month.
5. Salaries of $1,250 are accrued at June 30.
6. The office equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months.
7. Invoices representing $3,500 of services performed during the month have not been recorded as of June 30.

a. Prepare the adjusting entries for the month of June.
b. Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances. Use T accounts.
c. Prepare an adjusted trial balance at June 30, 2010.

Olathe Hotel opened for business on May 1, 2010. Here is its trial balance before adjustment on May 31?
Trial Balance
May 31, 2010
Debit Credit
Cash 2,500
Prepaid Insurance 1,800
Supplies 2,600
Land 15,000
Lodge 70,000
Furniture 16,800
Accounts Payable 4,700
Unearned Rent Revenue 3,300
Mortgage Payable 36,000
Common Stock 60,000
Rent Revenue 9,000
Salaries Expense 3,000
Utilities Expense 800
Advertising Expense 500
113,000 113,000

Other data:
1. Insurance expires at the rate of $300 per month.
2. A count of supplies shows $1,050 of unused supplies on May 31.
3. Annual depreciation is $3,600 on the lodge and $3,000 on furniture.
4. The mortgage interest rate is 7%. (The mortgage was taken out on May 1.)
5. Unearned rent of $2,500 has been earned.
6. Salaries of $750 are accrued and unpaid at May 31.

1. Journalize the adjusting entries on May 31.
2. Prepare a ledger using T-accounts. Enter the trial balance amounts and post the adjusting entries.
3. Complete the Adjusted Trial Balance as of May 31.
4. Complete the income statement and a retained earnings statement for the month of May and a classified balance sheet at May 31
5. Indicate which accounts should be closed on May 31.
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