Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 1CP
Continuing Problem
In this problem, we continue the accounting for Fitness Equipment Doctor, Inc., from Chapter 3 e. On June 1, Fitness Equipment Doctor, Inc., expanded its business and began selling and installing gym equipment. The post-closing trial balance for Fitness Equipment Doctor, Inc., as of May 31,2018, is presented next.
Fitness Equipment Doctor, Inc. May 31,2018 |
||||
ACCOUNT | DEBIT | CREDIT | ||
Cash | $ 23,410 | |||
Accounts Receivable | 8.000 | |||
Supplies | 450 | |||
Prepaid Rent | 4,800 | |||
Land | 16,000 | |||
Furniture | 2,100 | |||
$ 115 | ||||
Equipment | 3,600 | |||
Accumulated Depreciation, Equipment | 450 | |||
Vehicles | 35,800 | |||
Accumulated Depreciation. Vehicles | 1,200 | |||
Accounts Payable | 1,000 | |||
Salaries Payable | 675 | |||
Unearned Service Revenue | 2,900 | |||
Notes Payable (long-term) | 35,800 | |||
Common Stock | 45,000 | |||
Retained Earnings | 7,020 | |||
Total | $ 94,160 | $ 94,160 |
The following transactions occurred during the month of June:
Jun | 2 | Paid the receptionist’s salary, which was accrued on May 31. |
3 | Purchased $16,500 of merchandise on account from A to Z Equipment, Inc. Terms, 2/15, n/30, FOB shipping point. | |
4 | Received $5,800 payment from credit customers for May purchases. | |
5 | Purchased $225 of supplies. Paid cash. | |
6 | Paid freight charges of $275 related to the June 3 purchase. | |
8 | Sold a treadmill for $4,200 (cost, $2,300) on account to B. Sandoval. Terms, 1/15, n/30, FOB shipping point. | |
10 | Purchased office furniture for $1,600. Paid cash. | |
11 | Paid advertising expense, $565. | |
12 | Returned defective gym equipment, which was purchased on June 3. Received a $1,900 credit from A to Z Equipment, Inc. | |
13 | Sold gym equipment for $6,800 (cost. $3,700) to a cash customer. | |
14 | Provided repair services to cash customers, $865. | |
15 | Granted B. Sandoval a $300 allowance because of imperfections she detected upon receiving her treadmill. | |
16 | Paid receptionist's salary, $675. | |
17 | Paid A to Z Equipment, Inc the amount due from the June 3 purchase in full. | |
19 | Purchased $13,400 of inventory on account from Fitness Machines, Inc. Terms, 2/10, n/30, FOB destination. | |
21 | Sold gym equipment for $9,500 (cost, $5,250) on account to Body in Motion, Inc. Terms, 3/10, n/30, FOB destination. | |
22 | Received payment in full from B. Sandoval for the June 8 sale. | |
24 | Paid freight charges of $435 to have the gym equipment sold to Body in Motion, Inc. on June 21 delivered. | |
25 | Purchased repair equipment on account from Equipment Masters, Inc., for $3,660. Terms, n/30, FOB destination. | |
27 | Received payment in full from Body in Motion, Inc. for the June 21 sale. | |
28 | Paid in full the invoice from the June 19 purchase from Fitness Machines, Inc. | |
30 | Paid monthly utilities, $385. | |
30 | Paid sales commissions of $1,760 to the sales staff. |
Requirements
- 1. Journalize the transactions that occurred in June using the "net" method.
- 2. Using the four-column accounts from the Continuing Problem in Chapter 3S, post the transactions to the ledger, creating new ledger accounts as necessary; omit posting references. Calculate the new account balances.
- 3. Prepare the unadjusted trial balance for Fitness Equipment Doctor, Inc., at June 30.
- 4. Journalize and post the
adjusting entries for June based on the following adjustment information. Create new ledger accounts as necessary.- a. Record the expired rent.
- b. Supplies on hand, $285.
- c. Depreciation: equipment, $215; furniture, $65; vehicles, $460.
- d. A physical count of inventory revealed $16,295 of inventory on hand.
- e. Unearned service revenue still unearned as of June 30 was $275.
- f. Accrued the receptionist salary of $675.
- g. Record the estimated refund liability for June. The refund liability for the month was estimated to be 5 percent of the gross sales for the month. The cost of goods estimated to be returned was $560.
- 5. Prepare an adjusted trial balance for Fitness Equipment Doctor, Inc., at June 30.
- 6. Prepare the multistep income statement and statement of retained earnings for the month ended June 30. Also, prepare a classified
balance sheet at June 30. Assume rent expense, salaries expense, depreciation expense, supplies expense, and utilities expense are general expenses. - 7. Prepare and
post-closing entries. - 8. Prepare a post-closing trial balance at June 30.
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Chapter 4 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 4 - Prob. 1DQCh. 4 - What are some reasons why a merchandiser might...Ch. 4 - Why do businesses use subsidiary ledgers?Ch. 4 - Prob. 4DQCh. 4 - How many accounts are involved in recording the...Ch. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - What is the difference between a single-step and...Ch. 4 - Prob. 10DQ
Ch. 4 - Which account does a merchandiser use that a...Ch. 4 - The two main inventory accounting systems are the...Ch. 4 - Prob. 3SCCh. 4 - Prob. 4SCCh. 4 - Prob. 5SCCh. 4 - Prob. 6SCCh. 4 - Prob. 7SCCh. 4 - Prob. 8SCCh. 4 - Prob. 9SCCh. 4 - Prob. 10SCCh. 4 - Prob. 11SCCh. 4 - Prob. 12SCCh. 4 - Inventory methods (Learning Objective 2) 5-10 min....Ch. 4 - Prob. 2SECh. 4 - Prob. 3SECh. 4 - Prob. 4SECh. 4 - Prob. 5SECh. 4 - Prob. 6SECh. 4 - Prob. 7SECh. 4 - Journalizing sales and return transactions...Ch. 4 - Prob. 9SECh. 4 - Prob. 10SECh. 4 - Prob. 11SECh. 4 - Prob. 12SECh. 4 - Calculating gross profit percentage and net income...Ch. 4 - Prob. 14AECh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 16AECh. 4 - Prob. 17AECh. 4 - Prob. 18AECh. 4 - Prob. 19AECh. 4 - Prob. 20AECh. 4 - Prob. 21AECh. 4 - Preparing a single-step income statement (Learning...Ch. 4 - Prob. 23AECh. 4 - Prob. 24AECh. 4 - Prob. 25AECh. 4 - Prob. 26BECh. 4 - Prob. 27BECh. 4 - Prob. 28BECh. 4 - Prob. 29BECh. 4 - Prob. 30BECh. 4 - Journalizing inventory sales, returns, and freight...Ch. 4 - Prob. 32BECh. 4 - Prob. 33BECh. 4 - Prob. 34BECh. 4 - Prob. 35BECh. 4 - Prob. 36BECh. 4 - Prob. 37BECh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 39APCh. 4 - Prob. 40APCh. 4 - Prob. 41APCh. 4 - Prob. 42APCh. 4 - Prob. 43APCh. 4 - Prob. 44APCh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 46BPCh. 4 - Prob. 47BPCh. 4 - Journalizing inventory purchases, sales, returns,...Ch. 4 - Prob. 49BPCh. 4 - Prob. 50BPCh. 4 - Prob. 51BPCh. 4 - Prob. 1CECh. 4 - Continuing Problem In this problem, we continue...Ch. 4 - Continuing Financial Statement Analysis Problem...Ch. 4 - Prob. 1EIACh. 4 - Prob. 2EIACh. 4 - Prob. 1FACh. 4 - Prob. 1IACh. 4 - Prob. 1SBACh. 4 - Prob. 1WC
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