To prepare: T accounts and to
Introduction: Journal entries in respect of each account is posted to its respective T account. T accounts are ledger accounts prepared to ascertain the transactions entered in respect of each account and to obtain its closing balance thereafter.
Explanation of Solution
Preparation of cash account in general ledger:
Cash | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 14,100 | |||
February, 1 | Unearned sales revenue | 28,400 | 42,500 | ||
February, 1 | Rent expense | 800 | 41,700 | ||
February, 2 | Accounts payable | 1,500 | 40,200 | ||
February, 6 | Prepaid rent | 30,150 | 10,050 | ||
February, 9 | 325 | 10,375 | |||
February, 15 | Sales revenue | 3,400 | 13,775 | ||
February, 15 | Artist fee expense | 9,000 | 4,775 | ||
February, 20 | Unearned sales revenue | 10,125 | 14,900 | ||
February, 21 | Sales revenue | 5,100 | 20,000 | ||
February, 21 | Artist fee expense | 12,620 | 7,380 |
Table (1)
Preparation of accounts receivable account in general ledger:
Accounts receivable | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 400 | |||
February, 9 | Cash | 325 | 75 |
Table (2)
Preparation of supplies account in general ledger:
Supplies | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 2,500 | |||
February, 12 | Accounts payable | 475 | 2,975 |
Table (3)
Preparation of prepaid insurance account in general ledger:
Prepaid insurance | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 3,600 |
Table (4)
Preparation of prepaid rent account in general ledger:
Prepaid rent | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 10,000 | |||
February, 6 | Cash | 30,150 | 40,150 |
Table (5)
Preparation of equipment account in general ledger:
Equipment | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 7,000 |
Table (6)
Preparation of accounts payable account in general ledger:
Accounts payable | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | ||||
February, 2 | Cash | 1,500 | 0 | ||
February, 12 | Supplies | 475 |
Table (7)
Preparation of unearned sales revenue account in general ledger:
Unearned sales revenue | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | ||||
February, 1 | Cash | 28,400 | |||
February, 20 | Cash | 10,125 |
Table (8)
Preparation of notes payable account in general ledger:
Notes payable | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance |
Table (9)
Preparation of common stock account in general ledger:
Common stock | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance |
Table (10)
Preparation of sales revenue account in general ledger:
Sales revenue | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | ||||
February, 15 | Cash | 3,400 | |||
February, 21 | Cash | 5,100 |
Table (11)
Preparation of artist fee expense account in general ledger:
Artist fee expense | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 800 | |||
February, 15 | Cash | 9,000 | 9,800 | ||
February, 21 | Cash | 12,620 | 22,420 |
Table (12)
Preparation of rent expense account in general ledger:
Rent expense | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 800 | |||
February, 1 | Cash | 800 | 1,600 |
Table (13)
Preparation of salaries expense account in general ledger:
Salaries expense | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 2,400 |
Table (14)
Preparation of advertising expense account in general ledger:
Advertising expense | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 4,500 |
Table (15)
Preparation of legal expense account in general ledger:
Legal expense | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 1,200 |
Table (16)
Want to see more full solutions like this?
Chapter 3 Solutions
Cornerstones of Financial Accounting
- You have recently been appointed as the management accountant attached to the head office of the company with special responsibility of monitoring the performance of the companies within the group. Each company is treated as an investment center and every month produces an operating statement for the group headquarters. Summaries of the statements for companies X and Y which make similar products selling at similar prices for the last month showed a typical situation. Extract from the company monthly operating statements. X Y GHS000 GHS000 Sales 600 370 Less variable cost 229 208 Contribution 371 162 Less controllable fixed…arrow_forward! Required information Don Carson and two colleagues are considering opening a law office in a large metropolitan area to make inexpensive legal services available to people who cannot otherwise afford these services. They intend to provide easy access for their clients by having the office open 360 days per year, 16 hours each day from 7:00 a.m. to 11:00 p.m. A lawyer, paralegal, legal secretary, and clerk-receptionist would staff the office for each of the two 8-hour shifts. To determine the feasibility of the project, Don hired a marketing consultant to assist with market projections. The consultant's results show that if the firm spends $538,000 on advertising the first year, the number of new clients expected each day would have the following probability distribution: Number of New Clients per Day 10 20 40 60 Probability 0.10 0.10 0.20 0.60 Don and his associates believe these numbers to be reasonable and are prepared to spend the $538,000 on advertising. Other pertinent…arrow_forwardThe manager at the Overton Hotel in Lubbock believes that the success of the Texas Tech Red Raider Basketball team has an impact on the occupancy rate at the hotel during the first quarter of every year. Below are the number of victories for the Red Raiders in during the last three seasons and the hotel occupancy rate. This year, (year 4) the Red Raiders Basketball Team is expected to win 28 games and the manager at the Overton has asked you to determine their first quarter occupancy rate for the upcoming year (year 4) using associative forecasting. Year Wins First Quarter Occupancy Rate 1 25 2 3 27 31 88.32% 91.25% Ⓒ90.29% Ⓒ86.36% 92.21% 80% 90% 93%arrow_forward
- You have recently been appointed as the accountant attached to the head office of the company with the specific responsibility of monitoring the performance of the companies within the group. Each company is treated as an investment center and every month produces an operating statement for the group headquarters. Summaries of the statements for companies A and B which make similar products selling at similar prices for the last month showed a typical situation. Extract from the company monthly operating statements. A B GHS000 GHS000 Sales 600 370 Less variable cost 229 208 Contribution 371 162 Less controllable fixed overheads…arrow_forwardMini Case Study Five years ago, Phil Davis left his position at a large company to start Integrated Solutions Co. (ISC), a software design company. ISC’s first product was a unique software package that seamlessly integrated networked PCs. Robust sales of this initial product permitted the company to begin development of other software products and to hire additional personnel. The staff at ISC quickly grew from three people working out of Davis’s basement to over 70 individuals working in leased spaces at an industrial park. Continued growth led Davis to hire seasoned marketing, distribution, and production managers and an experienced accountant, Jan Smith. Recently, Davis decided that the company had become too large to run on an informal basis and that a formalized planning and control program centered on a budget was necessary. Davis asked the accountant, Jan Smith, to work with him in developing the initial budget for ISC. Davis forecasted sales revenues based on his projections…arrow_forwardDana Baird was manager of a new Medical Supplies Division. She had just finished her second year and had been visiting with the companys vice president of operations. In the first year, the operating income for the division had shown a substantial increase over the prior year. Her second year saw an even greater increase. The vice president was extremely pleased and promised Dana a 5,000 bonus if the division showed a similar increase in profits for the upcoming year. Dana was elated. She was completely confident that the goal could be met. Sales contracts were already well ahead of last years performance, and she knew that there would be no increases in costs. At the end of the third year, Dana received the following data regarding operations for the first three years: The predetermined fixed overhead rate is based on expected actual units of production and expected fixed overhead. Expected production each year was 10,000 units. Any under-or overapplied fixed overhead is closed to Cost of Goods Sold. Assumes a LIFO inventory flow. Upon examining the operating data, Dana was pleased. Sales had increased by 20 percent over the previous year, and costs had remained stable. However, when she saw the yearly income statements, she was dismayed and perplexed. Instead of seeing a significant increase in income for the third year, she saw a small decrease. Surely, the Accounting Department had made an error. Required: 1. Explain to Dana why she lost her 5,000 bonus. 2. Prepare variable-costing income statements for each of the three years. Reconcile the differences between the absorption-costing and variable-costing incomes. 3. If you were the vice president of Danas company, which income statement (variable-costing or absorption-costing) would you prefer to use for evaluating Danas performance? Why?arrow_forward
- The following table shows monthly revenue for six different web development companies. a. Use Excel to create sparklines for sales at each company. b. Which companies have generally decreasing revenues over the six months? Which company has exhibited the most consistent growth over the six months? Which companies have revenues that are both increasing and decreasing over the six months? c. Use Excel to create a heat map for the revenue of the six companies. Do you find the heat map or the sparklines to be better at communicating the trend of revenues over the six months for each company? Why?arrow_forward1. Consider the following scenario: [2.5] Imagine that you are in charge of a cycle hire business in a holiday resort. You have 50 cycles available for hire. Some customers hire cycles for one day; others take them for up to one week. Write down any three decisions that you might make as a manager, where accounting information would be helpful in making the decision.arrow_forwardSocial Media, Inc. (SMI) has two services for users. Toot!, which connects tutors with students who are looking for tutoring services, and TiX, which can be used to buy, sell, or exchange event tickets. For the following year, SMI expects the following results. Toot! TiX Total Users 10,700 18,100 28,800 Revenues $ 1,600,000 $ 1,440,000 $ 3,040,000 Engineering hours 8,200 6,200 14,400 Engineering cost $ 516,500 $ 635,500 $ 1,152,000 Administrative costs $ 921,600 Required: Compute the predetermined overhead rate used to apply administrative costs to the two services assuming SMI uses the number of usersto allocate administrative costs. Based on the rates computed in requirement (a), what is the profit for each service?arrow_forward
- Tami Tyler opened Tami’s Creations, Incorporated, a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler’s personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University. Tami’s Creations, IncorporatedIncome StatementFor the Quarter Ended March 31 Sales (28,600 units) $ 1,144,000 Variable expenses: Variable cost of goods sold $ 437,580 Variable selling and administrative 194,480 632,060 Contribution margin 511,940 Fixed expenses: Fixed manufacturing overhead 252,800 Fixed selling and administrative 271,140 523,940 Net operating loss $ ( 12,000) Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists…arrow_forwardTami Tyler opened Tami’s Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler’s personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University. Tami’s Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28,300 units) $ 1,132,000 Variable expenses: Variable cost of goods sold $ 432,990 Variable selling and administrative 192,440 625,430 Contribution margin 506,570 Fixed expenses: Fixed manufacturing overhead 250,400 Fixed selling and administrative 268,170 518,570 Net operating loss $ ( 12,000) Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as…arrow_forwardThe business staff of the law firm Frampton, Davis & Smythe has constructed the following report whichbreaks down the firm’s overall results for last month into two main business segments— family law andcommercial law:Family CommercialTotal Law LawRevenues from clients .................. $1,000,000 $400,000 $600,000Variable expenses ........................ 220,000 100,000 120,000Contribution margin ...................... 780,000 300,000 480,000Traceable fixed expenses ............ 670,000 280,000 390,000Segment margin ........................... 110,000 20,000 90,000Common fixed expenses .............. 60,000 24,000 36,000Net operating income ................... $ 50,000 $ (4,000) $ 54,000However, this report is not quite correct. The common fixed expenses such as the managing partner’s salary, general administrative expenses, and general firm advertising have been allocated to the two segmentsbased on revenues from clients.Required:1. Redo the segment report, eliminating the…arrow_forward
- Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningBusiness Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:Cengage