ACC205 week 1 exercise

Week One Exercise Assignment
Basic Accounting Equations 1. Recognition of normal balances
The following items appeared in the accounting records of Triguero’s, a retail
music store that also sponsors concerts. Classify each of the items as an
asset, liability, revenue, or expense from the company’s viewpoint. Also
indicate the normal account balance of each item. a. The albums, tapes, and CDs
held for sale to customers. b. A long-term loan owed to Citizens Bank. c.
Promotional costs to publicize a concert. d. Daily sales of merchandise sold,
e. Amounts due from customers, f. Land held as an investment, g. A new fax
machine purchased for office use. h. Amounts to be paid in 10 days to
suppliers, i. Amounts paid to a mall for rent.
2. Basic journal entries The following April transactions
pertain to the Jennifer Royall Company: Apr. 1 Jenni¬fer Royall invested cash
of $15,000 and land valued at $10,000 into the business. Apr. 5 provided $1,200
of services to Jason Ratchford, a client, on account. Apr. 9 paid $250 of
salaries to an employee. Apr. 14 acquired a new computer for $3,200, on
account. Apr. 20 collected $800 from Jason Ratchford for services provided on April
5. Apr. 24 borrowed $7,500 from BestBanc by securing a six-month loan. Prepare
journal entries (and explanations) to record the preceding transactions and
events.
3. Balance sheet
preparation. The following data relate to Preston Company as of December 31,
20XX: Building $44,000 Accounts receivable $24,000 Cash 17,000 Loan payable
30,000 J. Preston, Capital 65,000 Land 21,000 Accounts payable ? Prepare a
balance sheet as of December 31, 20XX. (See Exhibit 1.1 and 1.4)
4. Basic transaction processing. On November 1 of the current
year, Richard Parker established a sole proprietorship. The following
transactions occurred during the month: 1: Parker invested $19,000 into the
business for $19,000 in common stock. 2: Paid $9,000 to acquire a used minivan.
3: Purchased $1,800 of office furniture on account. 4: Performed $2,100 of
consulting services on account. 5: Paid $300 of repair expenses. 6: Received
$800 from clients who were previously billed in item 4. 7: Paid $500 on account
to the supplier of office furniture in item 3. 8: Received a $150 electric
bill, to be paid next month. 9: Parker withdrew $600 from the business. 10:
Received $250 in cash from clients for consulting services rendered.
Instructions a. Arrange the following asset, liability, and owner’s equity
elements of the accounting equation: Cash, Accounts Receivable, Office
Furniture, Van, Accounts Payable, Common Stock/Dividends, and
Revenues/Expenses. (See Exhibit 1.5) b. Record each transaction on a separate
line. After all transactions have been recorded, compute the balance in each of
the preceding items. c. Answer the following questions for Parker. (1) How much
does the company owe to its creditors at month-end? On which financial
statement(s) would this information be found? (2) Did the company have a “good”
month from an accounting viewpoint? Briefly explain.

5. Transaction analysis and statement preparation. The
transactions that follow relate to Burton Enterprises for March 20X1, the
company’s first month of activity. 3/1: Joanne Burton, the owner invested
$20,000 into the business for $20,000 of Common Stock. 3/4: Performed $2,400 of
services on account. 3/7: Acquired a small parcel of land by paying $6,000
cash. 3/12: Received $700 from a client, who was billed previously on March 4.
3/15: Paid $800 to the Journal Herald for advertising expense. 3/18: Acquired
$9,000 of equipment from Park Central Outfitters by paying $7,000 down and
agreeing to remit the balance owed within the next 2 weeks, (Accounts Payable).
3/22: Received $300 cash from clients for services. 3/24: Paid $1,500 on
account to Park Central Outfitters in partial settlement of the balance due
from the transaction on March 18. 3/28: Rented a car from United Car Rental for
use on March 28. Total charges amounted to $75, with United billing Burton for
the amount due. 3/31: Paid $900 for March wages. 3/31: Processed a $600 cash
withdrawal (dividend) from the business for Joanne Burton. Instructions a.
Determine the impact of each of the preceding transactions on Burton’s assets,
liabilities, and owner’s equity. See exhibit 1.5. Use the following format:
Assets = Liabilities + Owner’s Equity Cash, Accounts Receivable, Land,
Equipment Accounts Payable (+)Common Stock (+) Revenues (-) Dividends (-)
Expenses a. Record each transaction on a separate line. Calculate balances only
after the last transaction has been recorded. b. Prepare an income statement, a
statement of retained earnings, and a balance sheet (See Exhibit 1.2, 1.3 and
1.4).

6. Entry and trial balance preparation. Lee Adkins is a
portrait artist. The following schedule represents Lee’s combined chart of
accounts and trial balance as of May 31. Account number Account name Debit
Credit 110 Cash $ 2,700 120 Accounts Receivable 12,100 130 Equipment and
Supplies 2,800 140 Studio 45,000 210 Accounts Payable $2,600 310 Lee Adkins,
Capital 57,400 320 Lee Adkins, Drawing 30,000 410 Professional Fee Revenue
39,000 510 Advertising Expense 2,300 520 Salaries Expense 2,100 540 Utilities
Expense 2,000 $99,000 $99,000 The general ledger also revealed account no. 530,
Legal and Accounting Expense. The following transactions occurred during June:
6/2: Collected $7,500 on account from customers. 6/7: Sold 25% of the equipment
and supplies to a young artist for $700 for cash. 6/10: Received a $500 invoice
from the accountant for preparing last quarter’s financial statements. 6/15:
Paid $2,100 to creditors on account. 6/27: Adkins withdrew $1,000 cash for
personal use. 6/30: Billed a customer $3,000 for a portrait painted this month.
a. Record the necessary journal entries for June on page 2 of the company’s
general journal (See Exhibit 2.6). b. Open running balance ledger “T” accounts
by entering account titles, account numbers, and May 31 balances (See exhibit
2.3 and 2.4). c. Post the journal entries to the “T” accounts. d. Prepare a
trial balance as of June 30 (See exhibit 2.9).
7. Journal entry preparation. On January 1 of the current
year, Peter Houston invested $100,000 cash into his company MuniServ. The cash
was obtained from an owner investment by Peter Houston of $70,000 and a $30,000
notes payable. Shortly thereafter, the company acquired selected assets of a
bankrupt competitor. The acquisition included land ($15,000), a building
($40,000), and vehicles ($10,000). MuniServ paid $45,000 at the time of the
transaction and agreed to remit the remaining balance due of $20,000 (an
account payable) by February 15. During January, the company had additional
cash outlays for the following items: Purchases of store equipment $4,600 Note
payment 500 Salaries expense 2,300 Advertising expense 700 The January utility
bill of $200 was received on January 31 and will be paid next month. MuniServ
rendered services to clients on account amounting to $9,400. All customers have
been billed; by month end, $3,700 had been received in settlement of account
balances. Instructions a. Present journal entries that reflect MuniServ’s
January transactions, including the $100,000 raised from the owner investment
and loan (See exhibit 2.6). b. Compute the total debits, total credits, and
ending balance that would be found in the company’s Cash account (Post to “T”
Accounts, see exhibit 2.3 and 2.4). c. Prepare a trail balance as of January 31
(See exhibit 2.9).