Assets



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Brain Trust Consulting Company: Routine journal entries and adjusting journal entries

|Date |Journal Entry |DR |CR |

|Jan. 2 |Cash |$50,000 | |

| | Common stock | |$50,000 |

| |To record investment in the company and purchase of stock | | |

| | | | |

|Jan. 2 |Cash |10,000 | |

| | Notes payable | |10,000 |

| |To record note from bank | | |

| | | | |

|Jan. 6 |Supplies |500 | |

| | Accounts payable | |500 |

| |To record supplies purchased on account | | |

| | | | |

|Jan. 8 |Rent expense |800 | |

| | Cash | |800 |

| |To record rent payment. | | |

| | | | |

|Jan. 8 |Computers |16,000 | |

| | Cash | |16,000 |

| |To record computer purchase | | |

| | | | |

|Jan. 20 |Cash |2,200 | |

| | Unearned revenue | |2,200 |

| |To record revenue collected for next month services | | |

| | | | |

|Jan. 31 |Accounts receivable |12,000 | |

| | Service revenue | |12,000 |

| |To record service fees earned throughout the month | | |

Brain Trust Consulting Company: Routine journal entries and adjusting journal entries

|Date |Journal Entry |DR |CR |

|Jan. 31 |Salaries expense |7,000 | |

| | Cash | |7,000 |

| |To record salaries paid | | |

| | | | |

|Jan. 31 |Accounts payable |400 | |

| | Cash | |400 |

| |To record payment on supplies | | |

| | | | |

|Jan. 31 |Supplies expense |400 | |

| | Supplies | |$400 |

| |To record supplies used during January | | |

| | | | |

|Jan. 31 |Interest expense |100 | |

| | Notes payable | |100 |

| |To record interest due on notes payable | | |

| | | | |

|Jan. 31 |Depreciation expense |333 | |

| | Accumulated depreciation | |333 |

| |To record depreciation expense (assume a full month) | | |

To finish the accounting cycle, the company needs to (1) prepare an adjusted trial balance, (2) prepare the financial statements, (3) close the temporary accounts, and (4) prepare a postclosing trial balance.

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Susie’s Pottery Barn: Trial balance and financial statements

|Susie’s Pottery Barn |

|Adjusted Trial Balance |

|December 31, 2002 |

| |Debit |Credit |

|Cash |$ 1,000 | |

|Accounts receivable |5,000 | |

|Inventory |8,000 | |

|Equipment |10,000 | |

|Accumulated depreciation | |$ 3,000 |

|Prepaid rent |2,000 | |

|Accounts payable | |2,000 |

|Capital, Susie | |5,000 |

|Withdrawals |1,000 | |

|Revenues | | 20,000 |

|Depreciation expense |1,000 | |

|Salaries expense | 2,000 | |

| Total |$30,000 |$30,000 |

| | | |

|Susie’s Pottery Barn |

|Income Statement |

|For the Period Ended December 31, 2002 |

|Revenues | |$20,000 |

|Depreciation expense |$1,000 | |

|Salaries expense | 2,000 | |

| Total expenses | | (3,000) |

|Net income | |$17,000 |

| | | |

|Susie’s Pottery Barn |

|Statement of Owner’s Equity |

|For the Period Ended December 31, 2002 |

|Owner’s equity, 1/1/02 |$ 5,000  |

|Add: Net income |17,000  |

|Less: Withdrawal | (1,000) |

|Owner’s equity, 12/31/02 |$21,000  |

| | |

|Susie’s Pottery Barn |

|Balance Sheet |

|At December 31, 2002 |

|Assets | |Liabilities and Owner’s Equity |

|Cash |$ 1,000 | |Accounts payable |$ 2,000 |

|Accounts receivable |5,000 | | | |

|Inventory |8,000 | | | |

|Equipment (net of $3,000 | | | | |

|accumulated depreciation) |7,000 | | | |

|Prepaid rent | 2,000 | |Capital, Susie | 21,000 |

|Total assets |$23,000 | |Total liabilities and owner’s | |

| | | |equity |$23,000 |

| | | | | |

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Fast Feet Shoe Store: Closing entries and balance sheet

|Closing Entries |

|Sales |$100,000 | |

|Gain on sale of equipment |5,000 | |

| Retained earnings | |105,000 |

|Retained earnings |68,000 | |

| Cost of goods sold | |50,000 |

| Depreciation expense | |3,000 |

| Salaries expense | |15,000 |

|Retained earnings | |4,000 |

| Dividends |4,000 | |

|Fast Feet Shoe Store |

|Balance Sheet |

|At December 31, 2003 |

|Assets | |Liabilities and Shareholders’ Equity |

|Cash |$ 18,000 | |Accounts payable |$ 25,000 |

|Accounts receivable |22,000 | |Notes payable |15,000 |

|Supplies |31,000 | |Interest payable |2,000 |

|Equipment, net |9,000 | |Contributed capital |21,000 |

|Property |34,000 | |Retained earnings |* 59,000 |

|Prepaid rent | 8,000 | | | |

|Total assets |$122,000 | |Total liabilities and shareholders’ equity |$122,000 |

| | | | | |

|* |Retained earnings, January 01, 2003 |$26,000  |

| |Add: Net income |37,000  |

| |Less: Dividends | (4,000) |

| |Retained earnings, December 31, 2003 |$59,000  |

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Randy’s Radiator Repair Shop: Journal entries, closing entries, and trial balance

| |Journal Entries |

|a. |Prepaid rent |12,000 | |

| |Cash | |12,000 |

| | | | |

|b. |Supplies |10,000 | |

| |Cash | |10,000 |

| | | | |

|c. |Equipment |2,000 | |

| |Cash | |2,000 |

| | | | |

|d. |Prepaid insurance |1,000 | |

| |Cash | |1,000 |

| | | | |

|e. |Prepaid advertising |900 | |

| |Cash | |900 |

| | | | |

|f. |Cash |30,000 | |

| |Notes payable | |30,000 |

| | | | |

|g. |Cash |20,000 | |

| |Revenues | |20,000 |

| | | | |

|h. |No entry at this time. | | |

| | | | |

|i. |Dividends |1,000 | |

| |Cash | |1,000 |

|Adjusting Entries |

|Interest expense |600 | |

|Interest payable | |600 |

|Depreciation expense |400 | |

|Accumulated depreciation | |400 |

|Rent expense |5,500 | |

|Prepaid rent | |5,500 |

|Supplies expense |8,000 | |

|Supplies | |8,000 |

|Insurance expense |750 | |

|Prepaid insurance | |750 |

|Advertising expense |525 | |

|Prepaid advertising | |525 |

|Closing Entries |

|Revenues |20,000 | |

|Retained earnings | |20,000 |

|Retained earnings |15,775 | |

|Depreciation expense | |400 |

|Interest expense | |600 |

|Rent expense | |5,500 |

|Supplies expense | |8,000 |

|Insurance expense | |750 |

|Advertising expense | |525 |

|Retained earnings |1,000 | |

|Dividends | |1,000 |

|Trial Balance (in $) |Unadjusted |Adjusted |

| |DR |CR |DR |CR |

|Cash |23,100 | |23,100 | |

|Supplies |10,000 | |2,000 | |

|Equipment |2,000 | |2,000 | |

|Accumulated depreciation | | | |400 |

|Prepaid rent |12,000 | |6,500 | |

|Prepaid insurance |1,000 | |250 | |

|Prepaid advertising |900 | |375 | |

|Revenues | |20,000 | |20,000 |

|Notes payable | |30,000 | |30,000 |

|Interest payable | | | |600 |

|Dividends |1,000 | |1,000 | |

|Interest expense | | |600 | |

|Rent expense | | |5,500 | |

|Supplies expense | | |8,000 | |

|Depreciation expense | | |400 | |

|Insurance expense | | |750 | |

|Advertising expense | | |525 | |

|Retained earnings | | | | |

| Totals |$50,000 |$50,000 |$51,000 |$51,000 |

| | | | | |

|Trial Balance (in $) |Closing |Postclosing |

| |DR |CR |DR |CR |

|Cash | | |23,100 | |

|Supplies | | |2,000 | |

|Equipment | | |2,000 | |

|Accumulated depreciation | | | |400 |

|Prepaid rent | | |6,500 | |

|Prepaid insurance | | |250 | |

|Prepaid advertising | | |375 | |

|Revenues |20,000 | | | |

|Notes payable | | | |30,000 |

|Interest payable | | | |600 |

|Dividends | |1,000 | | |

|Interest expense | |600 | | |

|Rent expense | |5,500 | | |

|Supplies expense | |8,000 | | |

|Depreciation expense | |400 | | |

|Insurance expense | |750 | | |

|Advertising expense | |525 | | |

|Retained earnings | |3,225 | |3,225 |

| Totals |$20,000 |$20,000 |$34,225 |$34,225 |

| | | | | |

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Panda Company: T-accounts and financial statements

Transactions and adjustments for 2002

(BB = beginning balance and A = adjustment)

| | |Accounts |

|Cash | |receivable |

|BB 40,000 |17,000 (1/1) | |BB 16,500 |44,000 (12/31) |

|(1/1) 20,000 |2,400 (5/1) | |(12/31) 40,000 | |

|(3/1) 10,000 |5,000 (6/1) | |$12,500 | |

|(8/1) 9,600 |10,000 (7/1) | | | |

|(9/1) 13,000 |6,000 (8/1) | | | |

|(12/31) 44,000 |20,000 (11/1) | | | |

|$76,200 | | | | |

|Prepaid | | | | |

|rent | |Supplies | |Investments |

|(5/1) 2,400 |1,600 (A-5)* | |(10/1) 1,300 |1,100 (A-2)* | |(11/1) 20,000 | |

| | | | | | | | |

|Interest | | | |Accumulated |

|receivable | |Equipment | |depreciation |

|*(A-7) 200 | | |(1/1) 17,000 | | | |5,000 (A-3)* |

| | | | | | | | |

| | |Accounts | |Unearned |

|Land | |payable | |service revenue |

|BB 20,000 |16,000 (9/1) | |(8/1) 6,000 |17,000 BB | |*(A-6) 4,000 |9,600 (8/1) |

|7/1) 10,000 | | | |13,000 (10/1) | | | |

|$14,000 | | | |6,000 (12/31) | | | |

| | | | |$18,300 | | | |

|Interest | | | |Note |

|payable | |Dividends | |payable |

| |1,000 (A-4)* | |(6/1) 5,000 | | | |10,000 (3/1) |

| | | | | | | | |

|Salaries | |Retained | |Interest |

|payable | |earnings | |revenue |

| |2,300 (A-1)* | | |14,500 BB | | |200 *(A-7) |

| | | | | | | | |

|Operating | |Salary | |Rent |

|expenses | |expense | |expense |

|(12/31) 6,000 | | |*(A-1) 2,300 | | |*(A-5) 1,600 | |

| | | | | | | | |

|Contributed | |Service | |Supplies |

|capital | |(revenue) | |expense |

| |45,000 BB | | |40,000 (12/31) | |*(A-2) 1,100 | |

| |20,000 (1/1) | | |4,000 (A-6)* | | | |

| |$65,000 | | | | | | |

|Loss on | |Depreciation | |Interest |

|sale of land | |expense | |expense |

|(9/1) 3,000 | | |*(A-3) 5,000 | | |*(A-4) 1,000 | |

| | | | | | | | |

* Adjustments are not shown on the Unadjusted Trial Balance that follows.

|Unadjusted Trial Balance |

|(the balances in the accounts before any adjustments) |

| |Debit |Credit |

|Cash |$ 76,200 | |

|Accounts receivable |12,500 | |

|Prepaid rent |2,400 | |

|Supplies |1,300 | |

|Investment in certificate of deposit |20,000 | |

|Land |14,000 | |

|Equipment |17,000 | |

|Accounts payable | |$ 18,300 |

|Unearned revenue | |9,600 |

|Notes payable | |10,000 |

|Contributed capital | |65,000 |

|Retained earnings | |14,500 |

|Dividends |5,000 | |

|Service revenue | |40,000 |

|Operating expenses |6,000 | |

|Loss on sale of land |3,000 | |

| |$157,400 |$157,400 |

| | | |

|Panda Company |

|Income Statement |

|For the Year Ended December 31, 2002 |

|Service revenue |$44,000 | |

|Interest revenue | 200 |$44,200 |

|Expenses | | |

| Rent expense |$ 1,600 | |

| Supplies expense |1,100 | |

| Depreciation expense |5,000 | |

| Salaries expense |2,300 | |

| Operating expenses |6,000 | |

| Loss on sale of land |3,000 | |

| Interest expense | 1,000 | 20,000 |

|Net income | |$24,200 |

| | | |

|Panda Company |

|Statement of Changes in Shareholders’ Equity |

|For the Year ended December 31, 2002 |

|Beginning contributed capital |$45,000  |

|Capital contributed during the year | 20,000  |

|Ending contributed capital | 65,000  |

| | |

|Beginning retained earnings |14,500  |

|Net income for the year |24,200  |

|Dividends | (5,000) |

|Ending retained earnings |$33,700  |

| | |

|Total shareholders’ equity |$98,700  |

| | |

|Panda Company |

|Balance Sheet |

|At December 31, 2002 |

| Assets | |

|Cash |$ 76,200  |

|Prepaid rent |800  |

|Supplies |200  |

|Accounts receivable |12,500  |

|Interest receivable | 200  |

| Total current assets |89,900  |

|Investments |20,000  |

|Equipment |17,000  |

| Less accumulated depreciation |(5,000) |

|Land | 14,000  |

|Total assets |$135,900  |

| | |

| Liabilities | |

|Accounts payable |$ 18,300  |

|Salaries payable |2,300  |

|Interest payable |1,000  |

|Unearned revenue |5,600  |

|Note payable | 10,000  |

| Total liabilities (all current liabilities) |37,200  |

| Shareholders’ equity | |

|Contributed capital |65,000  |

|Retained earnings | 33,700  |

|Total liabilities and shareholders’ equity |$135,900  |

| | |

|Panda Company |

|Statement of Cash Flows |

|For the Year Ended December 31, 2002 |

|Cash flows from operating activities | |

| Payment for services received in advance |$ 9,600  |

| Cash collections for sales |44,000  |

| Cash disbursed for office space |(2,400) |

| Cash payments to vendors | (6,000) |

| Cash provided by operating activities | 45,200  |

| | |

|Cash flows from investing activities | |

| Cash paid for investment |$(20,000) |

| Cash paid for equipment |(17,000) |

| Cash paid for land |(10,000) |

| Cash received from sale of land | 13,000  |

| Cash provided by investing activities | (34,000) |

| | |

|Cash flows from financing activities | |

| Cash received from note |$ 10,000  |

| Cash received from contributions |20,000  |

| Cash paid for distributions | (5,000) |

| Cash provided by financing activities | 25,000  |

| | |

|Net increase in cash |$ 36,200  |

| | |

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