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Group Work – Chapters 1-4

1. The following events took place for XYZ Co. during the month of September 2018.

How much should XYZ Co. report as Total Expenses on the Income Statement for the month of September 2018?

• On September 1, building rent of $2,100 was paid to the landlord for 3 months rent in advance. The Prepaid Rent account was debited for $2,100 on September 1. $700

• XYZ Co. received a telephone bill for $250. The entire bill is for services used during September. $250

• XYZ Co. paid cash for Office Supplies of $2,000 in September. Office Supplies of $1,300 were used during the month. $1,300

• XYZ Co. used services from employees amounting to $3,500. Employees will be paid for those services next month. $3,500

• XYZ Co. purchased Inventory for $7,000.

• In September, XYZ Co. paid $800 on an Accounts Payable balance. Goods related to the Accounts Payable transaction were ordered and received in August.

• XYZ Co. paid the local newspaper $600 cash for a half-page ad that will appear in October’s paper.

• XYZ Co. paid $500 to a plumber for work done on the building during September. $500

Total Expenses for September? _________$6,250_______________

2. The following events took place for XYZ Co. during the month of September 2018.

How much should XYZ Co. report as Total Revenue on the Income Statement for the month of September 2018?

• XYZ Co. received $500 cash in the mail for services performed and billed to a customer in August.

• On August 1, XYZ Co. received $4,400 cash in advance for services to be performed in the following 2 months. In September, XYZ Co. had fulfilled half that obligation. $2,200

• XYZ Co. performed services in September of $3,000 and billed the customer for payment to be received in October. $3,000

• XYZ Co. performed services in September of $1,000 and received the cash at the time of service. $1,000

Total Revenues for September?____________$6,200______________

Group Work – Chapters 1-4

3. Prepare a journal entry in General Journal format for each of the following external transactions of XYZ Co. during the month of November 2018.

a. On November 1, XYZ Co. received $20,000 cash and $50,000 worth of Equipment from Owners in exchange for Common Stock in the company.

Cash $20,000

Equipment $50,000

Common Stock $70,000

b. On November 1, XYZ purchased an Insurance Policy that will provide risk coverage for the next 6 months. The policy cost $2,700.

Prepaid Insurance $2,700

Cash $2,700

c. On November 3, XYZ Co. sold some Land they were holding for a future business site – at cost. The Land was sold for $15,000 – receiving $5,000 Cash and a Note Receivable for the balance.

Cash $5,000

Note Receivable $10,000

Land $15,000

d. On November 15, XYZ Co. billed customers $3,600 for work performed during the month of November.

Accounts Receivable $3,600

Sales Revenue $3,600

e. On November 17, XYZ Co. received $4,400 cash in advance for services to be performed in the next two months.

Cash $4,400

Unearned Revenue $4,400

f. On November 18, XYZ Co. purchased supplies of $3,250 on account.

Supplies (Asset) $3,250

Accounts Payable $3,250

g. On November 20, XYZ Co. received cash of $2,000 from customers we earlier billed for services performed on November 15th.

Cash $2,000

Accounts Receivable $2,000

3. Assume the date is December 31, 2018. Prepare adjusting entries for XYZ Co. assuming the following adjustments need to be made to accounts.

a. On December 31, 2018, XYZ Co. received a utility bill of $350 for services used in December. The bill will be paid in January.

Utilities Expense $515

Utilities Payable $515

b. On November 1, 2018, XYZ purchased a 6 month Insurance policy for $2,700. Prepare an adjusting entry at December 31, 2018 assuming the account has not been adjusted since November 1.

Insurance Expense $900

Prepaid Insurance $900

c. On November 17, 2018, XYZ received $4,400 cash for services to be performed in the next two months. As of December 31, 2018, XYZ has performed $2,800 worth of those services.

Unearned Revenue $2,800

Sales Revenue $2,800

c. Assume at December 1, 2018, the Supplies account had a balance of $8,000. During the month of December supplies of $16,000 were purchased. At December 31, 2018, a count of supplies on hand says that there are $5,000 worth of supplies remaining. Prepare an adjusting entry for the amount of supplies used during the month of December.

|Supplies (Asset) | | | |

|$8,000 | | | | |

|$16,000 | | | | |

|  |$19,000 |Supplies Exp Adjustment |

|  | | | | |

|  |  | | | |

|$5,000 | | | | |

Supplies Expense $19,000

Supplies (Asset) $19,000

4. XYZ Co. had the following Account Balances at December 31, 2018. It is time for them to close their temporary accounts to get ready for the new fiscal year beginning January 1, 2019. Prepare the closing entry that would be necessary.

Cash $16,000 Contributed Capital $10,000

Accounts Receivable $26,000 Sales Revenue $93,000

Inventory $21,300 Cost of Goods Sold $60,400

Accounts Payable $15,000 Rent Expense $12,400

Unearned Revenue $ 8,000 Interest Expense $ 1,800

Retained Earnings $14,900 Depreciation Expense $ 3,000

Closing Entry

Sales Revenue $93,000

Cost of Goods Sold $60,400

Rent Expense $12,400

Interest Expense $1,800

Depreciation Expense $3,000

Retained Earnings $15,400

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