For Boniface Macharia.
Study 1 (Part A)
P2-69B
(Learning Objectives 4, 5, 6: Analyze the impact of business transactions on accounts; record (journalize and post) transactions in the books; construct and use a trial balance) During the first month of operations, Johnson Plumbing, Inc., completed the following transactions:
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Mar 2 |
Johnson received $35,000 cash and issued common stock to the stockholders. |
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3 |
Purchased supplies, $200, and equipment, $3,200, on account. |
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4 |
Performed services for a client and received cash, $1,400. |
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7 |
Paid cash to acquire land, $24,000. |
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11 |
Performed services for a customer and billed the customer, $800. Johnson expects to collect within one month. |
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16 |
Paid for the equipment purchased March 3 on account. |
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17 |
Paid the telephone bill, $150. |
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18 |
Received partial payment from customer on account, $400. |
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22 |
Paid the water and electricity bills, $170. |
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29 |
Received $1,500 cash for repairing the pipes of a customer. |
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31 |
Paid employee salary, $1,800. |
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31 |
Declared and paid dividends of $2,100. |
▸Requirements (60 points)
- 1. Record each transaction in the journal. Key each transaction by date. Explanations are not required.
- 2. Post the transactions to the T-accounts, using transaction dates as posting references.
- 3. Prepare the trial balance of Johnson Plumbing, Inc., at March 31 of the current year.
- 4. The manager asks you how much in total resources the business has to work with, how much it owes, and whether March was profitable (and by how much).
Case Study 1 (Part B)
P3-77B
(Learning Objectives 3, 4: Adjust the accounts; construct the financial statements) Consider the unadjusted trial balance of Princess, Inc., at August 31, 2012, and the related month-end adjustment data.
Adjustment data at August 31, 2012, include the following:
- a. Accrued advertising revenue at August 31, $2,100.
- b. Prepaid rent expired during the month. The unadjusted prepaid balance of $2,100 relates to the period August 2012 through October 2012.
- c. Supplies used during August, $2,090.
- d. Depreciation on furniture for the month. The furniture’s expected useful life is three years.
- e. Accrued salary expense at August 31 for Monday, Tuesday, and Wednesday. The five-day weekly payroll is $5,100 and will be paid on Friday.
▸ Requirements (40 points)
- 1. Using Exhibit 3-9 as an example, prepare the adjusted trial balance of Princess, Inc., at August 31, 2012. Key each adjusting entry by letter.
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