ITAL 112 Lecture Notes - Lecture 11: Authoritarianism
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On November 1, 2018, Kris Lehman established an interiordecorating business, Modern Designs. During the month, Kriscompleted the following transactions related to the business:
Nov. | 1 | Kris transferred cash from apersonal bank account to an account to be used for the business inexchange for common stock, $27,600. |
1 | Paid rent for period of November 1to end of month, $3,200. | |
6 | Purchased office equipment onaccount, $12,860. | |
8 | Purchased a truck for $31,700paying $6,200 cash and giving a note payable for theremainder. | |
10 | Purchased supplies for cash,$1,480. | |
12 | Received cash for job completed,$8,400. | |
15 | Paid annual premiums on propertyand casualty insurance, $2,400. | |
23 | Recorded jobs completed on accountand sent invoices to customers, $12,060. | |
24 | Received an invoice for truckexpenses, to be paid in November, $1,230. |
Enter the following transactions on Page 2 of the two-columnjournal:
Nov. | 29 | Paid utilities expense,$3,590. |
29 | Paid miscellaneous expenses,$1,500. | |
30 | Received cash from customers onaccount, $7,400. | |
30 | Paid wages of employees,$4,200. | |
30 | Paid creditor a portion of theamount owed for equipment purchased on November 6, $6,190. | |
30 | Paid dividends, $2,200. |
Required: | |
1. | Journalize each transaction ina two-column journal beginning on Page 1, referring to the chart ofaccounts in selecting the accounts to be debited and credited. (Donot insert the post reference numbers until you have posted theentry to the general ledger in part 2.) Refer to the Chart ofAccounts for exact wording of account titles. |
2. | Post (in chronological order)the journal to a ledger of four-column accounts, insertingappropriate posting references in both the journal and the ledgeras each item is posted. Extend the balances to the appropriatebalance columns after each transaction is posted. |
3. | Prepare an unadjusted trialbalance for Modern Designs as of November 30, 2018. |
4. | Determine the excess ofrevenues over expenses for November. |
5. | Can you think of any reason whythe amount determined in (4) might not be the net income forNovember? |
The following transactions apply to Bobâs Bike Shop for 2016,its first year of operations:
1. | Acquired $35,000 cash from theissue of common stock. | ||||||||||
2. | Acquired $9,600 of merchandise from Bob Hall, the owner, who hadacquired the merchandise prior to opening the shop. Issued commonstock to Bob in exchange for the merchandise inventory. | ||||||||||
3. | Purchased $85,000 of inventoryon account. | ||||||||||
4. | Paid $2,800 for radio ads. | ||||||||||
5. | Sold inventory for $165,000cash. | ||||||||||
6. | Paid $28,000 in salary to apart-time salesperson. | ||||||||||
7. | Paid $65,000 on accounts payable(see Event 3). | ||||||||||
8. | Physically counted inventory, which indicated that $28,500 ofinventory was on hand at the end of the accounting period.
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The followingtransactions apply to Bobâs Bike Shop for 2016, its first year ofoperations: |
1. | Acquired $35,000 cash from theissue of common stock. |
2. | Acquired $9,600 of merchandise from Bob Hall, the owner, who hadacquired the merchandise prior to opening the shop. Issued commonstock to Bob in exchange for the merchandise inventory. |
3. | Purchased $85,000 of inventoryon account. |
4. | Paid $2,800 for radio ads. |
5. | Sold inventory for $165,000cash. |
6. | Paid $28,000 in salary to apart-time salesperson. |
7. | Paid $65,000 on accounts payable(see Event 3). |
8. | Physically counted inventory, which indicated that $28,500 ofinventory was on hand at the end of the accounting period. A. Record each transaction in general journal form using theperiodic method: record entry for issuance of common stock, recordentry for issuance of common stock in exchange for the merchandiseinventory, record entry for inventory purchased on amount, recordentry for radio ads paid, record sale of inventory for cash, recordentry for salary paid to a part time sales person, record entrycash paid for accounts payable, record adjusting entry for physicalcounted inventory on hand at the end of the accounting period. B. Post each of the events to ledger T-accounts. C. Prepare an income statement of changes in stockholdersequity, balance sheet, and statement of cash flows. D. Prepare the necessary closing entries at the end of 2016, andpost them to the appropiate T-accounts. |
E. Prepare a post-closing trial balance