Acc121 Financial Accounting: Practice Set - Lawn Ranger Landscaping Service
Acc121 Financial Accounting Comprehensive Problem 2 Practice Set: The Lawn Ranger Landscaping Service This set is a service business operated as a proprietorship. It includes a narrative of transactions and instructions for an optional solution with no debits and credits. This set can be solved manually or with the General Ledger software. NARRATIVE OF TRANSACTIONS (Note: Unless stated otherwise, assume that all cash in and out is checking account related.) No. Date Transaction 1 7/1 Kyle opened two accounts at Pioneer State Bank, using $3,000 of his own money. He deposited $2,500 in a checking account and $500 into savings. 2 7/2 Kyle borrowed $6,000 from his Aunt Martha and signed a note with 8% interest. Under the terms of the note, he must make payments of $250 plus accrued interest on the first day of each month. Kyle put $4,500 into his checking account and $1,500 into savings. 3 7/3 Kyle purchased a 2006 Nissan pickup truck by writing a check for $4,820. 4 7/3 Kyle purchased insurance for the pickup truck at a cost of $150 per month. He paid for the month of July. 5 7/3 Kyle established a cell phone account for the business. The phone was free, and he paid $75 for the first month’s service. 6 7/5 Kyle returned to the bank and applied for a VISA® card. He received a card with a $1,000 credit limit. 7 7/5 Kyle purchased a lawn mower and garden tools on account from Young’s Home & Garden Center. The total cost was $1,080. (Debit Lawn Equipment.) 8 7/6 Kyle purchased $185 worth of gloves, stakes, trimmer lines, and other supplies at the local hardware store using his VISA card. 9 7/6 Kyle paid $80 cash for gas and oil for his pickup truck and the mower. 10 7/7 A box of 500 additional checks arrived from the bank along with a memo that the $25 cost was charged to Kyle’s checking account. He considered this an immaterial amount and charged it all to Office Supplies Expense. 11 7/7 Kyle had 1,500 advertising flyers printed to promote his new business. The flyers cost $225 and are considered advertising materials. He also purchased $90 of office supplies. Kyle used his VISA for all of these purchases. 12 7/8 One of Kyle’s neighbors, Mr. Lee, is leaving town for six weeks. He paid Kyle $360 to mow his lawn each week and keep his hedges trimmed while he is away. 13 7/9 Kyle paid $75 cash to rent some equipment needed for the Abrams job (see transaction 15). 14 7/10 Kyle purchased another $60 of gas using his VISA card. 15 7/11 Kyle completed a landscaping and clean-up job for Mr. Abrams. He left Mr. Abrams a bill for $720. 16 7/13 Kyle charged another $140 in landscaping supplies at Young’s Home & Garden Center. 17 7/14 Kyle completed a $550 job for Mrs. Mercado. She had hired him to mow her lawn and create a perennial flower bed in the front of her house. Mrs. Mercado paid him $250 and agreed to pay the rest later. 18 7/15 Kyle’s girlfriend insisted that he take a break. He withdrew $120 from his checking account to go out for a nice evening with his girlfriend, Melissa. They went in Melissa’s car, as an evening out in a landscaping truck wasn’t exactly what they were looking for. 19 7/16 Kyle charged $110 on his VISA card for an oil change and some other minor maintenance on his truck. 20 7/17 Kyle paid Young’s Home& Garden Center $175 on his account. 21 7/17 Kyle transferred $300 from his checking account to his savings account. 22 7/18 Kyle wrote a check for $40 for fuel for the truck and mower. 23 7/19 Kyle had no cash on him, so he wrote a business check for $12 to pay for his lunch. 24 7/19 Kyle completed a job in which he mowed Mrs. O’Brien’s lawn and created two new flower beds. She paid him $425 in cash. 25 7/20 Kyle paid $55 to rent a piece of equipment to assist in trimming Mr. Lovette’s trees (transaction 26). 26 7/20 Mr. Lovette paid Kyle $150 to mow his lawn and trim his trees. 27 7/21 Kyle received $400 from Mr. Abrams, with a note that he would pay the balance next week. 28 7/22 Kyle paid $80 to rent some equipment needed for the Roker job (see transaction 29). 29 7/23 Kyle completed a $700 job landscaping Mr. Roker’s pool area. He was paid $200 in cash, and Mr. Roker agreed to pay the balance in August. 30 7/24 A check for $150 was received from Mrs. Mercado as partial payment on the work Kyle completed on July 14. 31 7/24 Kyle charged (on his VISA) another $65 for landscaping supplies. 32 7/25 Mrs. Feldman paid Kyle $140 to mow, weed, and put new mulch in her garden beds. 33 7/26 Kyle wrote a check for $85 for more fuel for his truck and mower. 34 7/27 Kyle purchased an additional $45 of office supplies. 35 7/30 Kyle paid another $75 on his account at Young’s Home & Garden Center. 7/31 Now that Kyle has completed his first month in business he wants to prepare financial statements. He has gathered the information needed to make adjustments for the month ended July 31. Information for Adjustments A1 Kyle estimates that his truck will last four years and have an estimated salvage value of $500. (Kyle is using straight-line depreciation for all assets.) A2 The lawn mower and tools should last three years, with no salvage value. A3 Kyle needs to accrue one month’s interest on his loan from Aunt Martha. A4 By July 31, Kyle had mowed Mr. Lee’s yard three of the six agreed-upon times. A5, A6 As of July 31, Kyle had $25 of office supplies, $75 of landscaping supplies, and 200 & A7 advertising flyers still on hand. A8 Kyle’s bank statement showed that his savings account had earned $5 in interest revenue. THE LAWN RANGER LANDSCAPING SERVICE CHART OF ACCOUNTS ASSETS 100 Cash-Checking 105 Cash-Savings 110 Accounts Receivable-Mr. Abrams 111 Accounts Receivable-Mrs. Mercado 112 Accounts Receivable- Mr Roker 120 Advertising Materials 130 Office Supplies 140 Landscaping Supplies 150 2006 Nissan Pickup Truck 151 Accumulated Depreciation-Pickup Truck 160 Lawn Equipment 161 Accumulated Depreciation-Lawn Equipment LIABILITIES 200 Note Payable-Aunt Martha 210 Accounts Payable-Young's Home & Garden Center 220 Accounts Payable-VISA 230 Interest Payable 240 Unearned Revenue CAPITAL 300 Kyle Cross, Capital 310 Kyle Cross, Drawing 320 Income Summary REVENUES 400 Lawn Care/Landscaping Revenue 410 Interest Revenue EXPENSES 500 Landscaping Supplies Expense 510 Gas and Oil Expense 520 Telephone Expense 530 Advertising Expense 540 Office Supplies Expense 545 Interest Expense 550 Pickup Truck Maintenance 560 Equipment Rental Expense 570 Insurance Expense 580 Depreciation Expense-Pickup Truck 590 Depreciation Expense-Lawn Equipment Instructions 1. Familiarize yourself with the contents of this booklet before you begin. 2. Read through the chart of accounts. 3. Prepare the entries using the list of transactions. Put them in the general journal. 4. Post the journal entries from the general journal to the general ledger. 5. Prepare a trial balance using the general ledger totals. Put it on the work sheet. 6. Complete the work sheet using the information for adjustments. 7. Prepare the financial statements from the work sheet. 8. Make the adjusting journal entries in the general journal. 9. Post the adjustments to the general ledger. 10. Make the appropriate closing entries in the general journal. 11. Post the closing entries to the general ledger. 12. Prepare a post-closing trial balance.
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