Acc101 Accounting: Comprehensive Problem 1 For Chapters 1–4 (Magness Company)
Acc101 AccountingComprehensive Problem 1 For Chapters 1–4 Magness Delivery Service completed the following transactions during December 2016: Dec 1. Magness Delivery Service began operations by receiving $10,000 cash and a truck with a fair value of $20,000 from Robert Magness. The business gave Magness capital in exchange for this contribution. 1. Paid $1,000 cash for a four-month insurance policy. The policy begins December 1. 4. Paid $500 cash for office supplies. 12. Performed delivery services for a customer and received $2,000 cash. 15. Completed a large delivery job, billed the customer, $2,500, and received a promise to collect the $2,500 within one week. 18. Paid employee salary, $1,000. 20. Received $15,000 cash for performing delivery services. 22. Collected $800 in advance for delivery service to be performed later. 25. Collected $2,500 cash from customer on account. 27. Purchased fuel for the truck, paying $300 on account. (Credit Accounts Payable). 28. Performed delivery services on account, $700. 29. Paid office rent, $1,600, for the month of December. 30. Paid $300 on account. 31. Magness withdrew cash of $3,000. Requirements 1. Record each transaction in the journal. Explanations are not required. 2. Post the transactions in the T-accounts using the following chart of accounts. 3. Prepare an unadjusted trial balance as of December 31, 2016. 4. Prepare a worksheet as of December 31, 2016. (optional) 5. Journalize the adjusting entries using the following adjustment data. Post adjusting entries to the T-accounts. Adjustment data: a. Accrued Salaries Expense, $1,000. b. Depreciation was recorded on the truck using the straight-line method. Assume a useful life of five years and a salvage value of $5,000. c. Prepaid Insurance for the month has expired. d. Office Supplies on hand, $100. e. Unearned Revenue earned during the month, $300. f. Accrued Service Revenue, $650. 6. Prepare an adjusted trial balance as of December 31, 2016. 7. Prepare Magness Delivery Service’s income statement and statement of owner’s equity for the month ended December 31, 2016, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount—that is, the largest expense first, the smallest expense last. 8. Calculate the following ratios as of 12/31/2016: Debt ratio and Current ratio. 9. Journalize the closing entries and post to the T-accounts. 10. Prepare a post- closing trial balance as of December 31, 2016.
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