Categories

ACCT 382 - Week 2 - Chapter 2 Homework

ACCT 382 - Week 2 - Chapter 2 Homework
Price: $24.99
This Tutorial contains following Attachments
  • ACCT 382 - Week 2 - Chapter 2 Homework.doc
Qty:     - OR -   Add to Wish List

ACCT 382 - Week 2 - Chapter 2 Homework

Question 1

The following transactions occurred during March 2013 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.

1.

Issued 30,000 shares of common stock in exchange for $300,000 in cash.

2.

Purchased equipment at a cost of $40,000. $10,000 cash was paid and a note payable was signed for the balance owed.

3.

Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system.

4.

Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000.

5.

Paid $5,000 in rent on the warehouse building for the month of March.

6.

Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2013.

7.

Paid $70,000 on account for the merchandise purchased in 3.

8.

Collected $55,000 from customers on account.

9.

Recorded depreciation expense of $1,000 for the month on the equipment.

Required:

Analyze each transaction and show the effect of each on the accounting equation for a corporation. (Amounts to be deducted should be indicated by a minus sign. Enter the net change on the accounting equation.)

 

Question 2

The following transactions occurred during March 2013 for the Wainwright Corporation. The company owns and operates a wholesale warehouse

a.

Issued 30,000 shares of common stock in exchange for $300,000 in cash.

b.

Purchased equipment at a cost of $40,000. $10,000 cash was paid and a note payable was signed for the balance owed.

c.

Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system.

d.

Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000.

e.

Paid $5,000 in rent on the warehouse building for the month of March.

f.

Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2013.

g.

Paid $70,000 on account for the merchandise purchased in transaction c.

h.

Collected $55,000 from customers on account.

i.

Recorded depreciation expense of $1,000 for the month on the equipment.

Prepare journal entries to record each of the transactions listed above. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

 

Question 3

Listed below are several terms and phrases associated with the accounting processing cycle. Pair each item from List A (by letter) with the item from List B that is most appropriately associated with it.

 

 

List A

List B

 

1.

Source documents

a.

Record of the dual effect of a transaction in debit/credit form.

 

2.

Transaction analysis

b.

Internal events recorded at the end of a reporting period.

 

3.

Journal

c.

Primary means of disseminating information to external decision makers.

 

4.

Posting

d.

To zero out the owners’ equity temporary accounts.

 

5.

Unadjusted trial balance

e.

Determine the dual effect on the accounting equation.

 

6.

Adjusting entries

f.

List of accounts and their balances before recording adjusting entries.

 

7.

Adjusted trial balance

g.

List of accounts and their balances after recording closing entries.

 

8.

Financial statements

h.

List of accounts and their balances after recording adjusting entries.

 

9.

Closing entries

i.

A means of organizing information: not part of the formal accounting system.

 

10.

Post-closing trial balance

j.

Transferring balances from the journal to the ledger.

 

11.

Worksheet

k.

Used to identify and process external transactions.

 

 

Question 4

Indicate whether a debit will increase (I) or decrease (D) each of the following accounts listed in items 1 through 16:

Increase (I) or Decrease (D)

Account

1.

 

Inventory

2.

 

Depreciation expense

3.

 

Accounts payable

4.

 

Prepaid rent

5.

 

Sales revenue

6.

 

Common stock

7.

 

Wages payable

8.

 

Cost of goods sold

9.

 

Utility expense

10.

 

Equipment

11.

 

Accounts receivable

12.

 

Utilities payable

13.

 

Rent expense

14.

 

Interest expense

15.

 

Interest revenue

16.

 

Gain on sale of equipment

 

 

Question 5

1.

A three-year fire insurance policy was purchased on July 1, 2013, for $12,000. The company debited insurance expense for the entire amount.

2.

Depreciation on equipment totaled $15,000 for the year.

3.

Employee salaries of $18,000 for the month of December will be paid in early January 2014.

4.

On November 1, 2013, the company borrowed $200,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2014.

5.

On December 1, 2013, the company received $3,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December and January, was credited to unearned rent revenue

Prepare the necessary adjusting entries at December 31, 2013, for the Falwell Company for each of the above situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

 

Question 6

The December 31, 2013, adjusted trial balance for the Blueboy Cheese Corporation is presented below.

   

  Account Title  

Debits

Credits

  Cash

21,000   

 

  Accounts receivable

300,000   

 

  Prepaid rent

10,000   

 

  Inventory

50,000   

 

  Equipment

600,000   

 

  Accumulated depreciation—equipment

 

250,000   

  Accounts payable

 

60,000   

  Note payable (due in six months)

 

60,000   

  Salaries payable

 

8,000   

  Interest payable

 

2,000   

  Common stock

 

400,000   

  Retained earnings

 

100,000   

  Sales revenue

 

800,000   

  Cost of goods sold

480,000   

 

  Salaries expense

120,000   

 

  Rent expense

30,000   

 

  Depreciation expense

60,000   

 

  Interest expense

4,000   

 

  Advertising expense

5,000   

 

 



      Totals

1,680,000   

1,680,000   

 






   

Question 7

The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2013, trial balances contained the following account information:

   

 

Nov. 30

Dec. 31

 

Dr.

Cr.

Dr.

Cr.

  Supplies

1,500   

 

3,000   

 

  Prepaid insurance

6,000   

 

4,500   

 

  Wages payable

 

10,000  

 

15,000  

  Unearned rent revenue

 

2,000  

 

1,000  


   

   The following information also is known:

a.

The December income statement reported $2,000 in supplies expense.

b.

No insurance payments were made in December.

c.

$10,000 was paid to employees during December for wages.

d.

On November 1, 2013, a tenant paid Righter $3,000 in advance rent for the period November through January. Unearned rent revenue was credited.