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Greg Failla operates Showbiz Video. The following accounts are used to record business transactions.

General Ledger 101 Cash in Bank207 Accts. Pay.—New Media Suppliers105 Accts. Rec.—G. Cohen209 Accts. Pay.—Palace Films110 Accts. Rec.—J. Coletti301 Greg Failla, Capital113 Accts. Rec.—S. Flannery305 Greg Failla, Withdrawals115 Accts. Rec.—Spring310 Income SummaryBranch School District401 Video Rental Revenue130 Office Equipment405 VCR Rental Revenue135 Office Furniture501 Advertising Expense140 Computer Equipment505 Equipment Repair Expense145 Video Tapes510 Maintenance Expense150 Video Equipment520 Rent Expense201 Accts. Pay.—Broad Street525 Salaries ExpenseOffice Supply530 Utilities Expense205 Accts. Pay.—Computer Horizons \begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{207 Accts. Pay.—New Media Suppliers}\\ \text{105 Accts. Rec.—G. Cohen} & \text{209 Accts. Pay.—Palace Films}\\ \text{110 Accts. Rec.—J. Coletti} & \text{301 Greg Failla, Capital}\\ \text{113 Accts. Rec.—S. Flannery} & \text{305 Greg Failla, Withdrawals}\\ \text{115 Accts. Rec.—Spring} & \text{310 Income Summary}\\ \text{Branch School District} & \text{401 Video Rental Revenue}\\ \text{130 Office Equipment} & \text{405 VCR Rental Revenue}\\ \text{135 Office Furniture} & \text{501 Advertising Expense}\\ \text{140 Computer Equipment} & \text{505 Equipment Repair Expense}\\ \text{145 Video Tapes} & \text{510 Maintenance Expense}\\ \text{150 Video Equipment} & \text{520 Rent Expense}\\ \text{201 Accts. Pay.—Broad Street} & \text{525 Salaries Expense}\\ \text{Office Supply} & \text{530 Utilities Expense}\\ \text{205 Accts. Pay.—Computer} & \text{ }\\ \text{Horizons} & \text{ }\\ \end{matrix}

Record the following transactions on page 5 of the general journal in your working papers.

DateTransactionsJan. 1Deposited $3,400 in receipts. Of that amount, $1,900 was VCR rentals and $1,500 was video tape rentals, Receipt 435.3Wrote Check 1250 for $325 of equipment repairs.5Purchased $400 in video tapes from Palace Films on account, Invoice PF32.7Bought from New Media Suppliers $2,600 in video equipment. Made a down payment of $600 and agreed to pay the balance in two installments, Check 1251 and Invoice NM101.10Rented videos to Spring Branch School District. The school district agreed to pay $1,800 at a later date, Sales Invoice 1650.12Issued Check 1252 for $750 to Computer Horizons for the amount owed to them. 15Deposited $5,600 in receipts. VCR rentals amounted to $4,400 and video tape rentals were $1,200, Receipt 436. 18Paid Clear Vue Window Cleaners $100 for monthly window cleaning, Check 1253.25Made a $1,000 installment payment toward the amount owed to New Media Suppliers by issuing Check 1254.\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 1} & \text{Deposited $\$ 3,400$ in receipts. Of that amount, $\$ 1,900$ was VCR rentals and $\$ 1,500$ was video tape rentals, Receipt 435.}\\ \text{3} & \text{Wrote Check 1250 for $\$ 325$ of equipment repairs.}\\ \text{5} & \text{Purchased $\$ 400$ in video tapes from Palace Films on account, Invoice PF32.}\\ \text{7} & \text{Bought from New Media Suppliers $\$ 2,600$ in video equipment. Made a down payment of $\$ 600$ and agreed to pay the balance in two installments, Check 1251 and Invoice NM101.}\\ \text{10} & \text{Rented videos to Spring Branch School District. The school district agreed to pay $\$ 1,800$ at a later date, Sales Invoice 1650.}\\ \text{12} & \text{Issued Check 1252 for $\$ 750$ to Computer Horizons for the amount owed to them. }\\ \text{15} & \text{Deposited $\$ 5,600$ in receipts. VCR rentals amounted to $\$ 4,400$ and video tape rentals were $\$ 1,200,$ Receipt 436. }\\ \text{18} & \text{Paid Clear Vue Window Cleaners $\$ 100$ for monthly window cleaning, Check 1253.}\\ \text{25} & \text{Made a $\$ 1,000$ installment payment toward the amount owed to New Media Suppliers by issuing Check 1254.}\\ \end{array}

An auditor reviewed the accounting records of Showbiz Video. The auditor wrote a list of transactions, outlined below, describing the errors discovered in the March records. The general journal for March and a portion of the general ledger are included in your working papers. 1. Record correcting entries on general journal page 22. Use March 31 as the date and Memorandum 50 as the source document for all correcting entries. 2. Some errors will not require correcting entries but will require a general ledger correction. Make the appropriate general ledger corrections. 3. Post all correcting entries to the general ledger accounts.

DateTransactionsMar. 3The $125 purchase was for office supplies.7A $200 payment to a creditor, Broad Street Office Supply, was not posted to the account.13Greg Failla withdrew $1,200 from the business for personal use.17Cash totaling $2,000 was received for video rentals.19A $75 receipt from Shannon Flannery was posted as $57.27Greg Failla invested an additional $3,000 in the business.29The revenue of $1,000 was for video rentals.\begin{array}{ll} \text{Date} & \text{Transactions}\\ \text{Mar. 3} & \text{The \$125 purchase was for office supplies.}\\ \text{7} & \text{A \$200 payment to a creditor, Broad Street Office Supply, was}\\ \text{ } & \text{not posted to the account.}\\ \text{13} & \text{Greg Failla withdrew \$1,200 from the business for personal use.}\\ \text{17} & \text{Cash totaling \$2,000 was received for video rentals.}\\ \text{19} & \text{A \$75 receipt from Shannon Flannery was posted as \$57.}\\ \text{27} & \text{Greg Failla invested an additional \$3,000 in the business.}\\ \text{29} & \text{The revenue of \$1,000 was for video rentals.}\\ \end{array}

Compute the amount that Greg Failla, Capital was overstated or understated before the correcting entries were posted.

Showbiz Video completed the following payroll transactions during the first two weeks of December. Showbiz Video pays its employees on a biweekly basis (every two weeks). In your working papers: 1. Record the December 13 transactions on page 38 in the general journal. 2. Post both payroll entries to the appropriate general ledger accounts. 3. Journalize and post the December 16 transactions. $$ \begin{array}{rl} \text{Date} & \text{Transactions}\\ \text{Dec. 13} & \text{Wrote Check 2206 to pay the payroll of \$3,840.58 (gross}\\ \text{ } & \text{earnings) for the pay period ending December 13. The}\\ \text{ } & \text{following amounts were withheld: FICA taxes, \$238.12 for}\\ \text{ } & \text{social security and \$55.69 for Medicare; employees’ federal}\\ \text{ } & \text{income taxes, \$639.00; employees’ state income taxes, \$96.02;}\\ \text{ } & \text{insurance premium, \$21.00; U.S. savings bonds, \$20.00.}\\ \text{13} & \text{Recorded the employer’s payroll taxes (FICA tax rates, 6.2\\% for}\\ \text{ } & \text{social security and 1.45\\% for Medicare; federal unemployment}\\ \text{ } & \text{tax rate, 0.8%; state unemployment tax rate, 5.4%). No}\\ \text{ } & \text{employee has reached the maximum taxable amount.}\\ \text{16} & \text{Paid the amounts owed to the federal government for }\\ \text{ } & \text{employees’ federal income taxes and FICA taxes, Check 2215. }\\ \text{16} & \text{Purchased U.S. savings bonds for employees for \$100.00, }\\ \text{ } & \text{Check 2216. }\\ \text{16} & \text{Paid \$148.00 to American Insurance Company for employees’}\\ \text{ } & \text{insurance, Check 2217.}\\ \end{array} $$ Identify the payroll accounts that have a balance after entries have been posted.

Greg Failla owns Showbiz Video. He uses the following accounts to record business transactions.

General Ledger 101 Cash in Bank205 Accounts Payable—105 Accounts Receivable—Computer HorizonsGabriel Cohen207 Accounts Payable—110 Accounts Receivable—New Media SuppliersJames Coletti301 Greg Failla, Capital140 Computer Equipment305 Greg Failla, Withdrawals145 Video Tapes401 Video Rental Revenue 405 VCR Rental Revenue 505 Equipment Repair Expense 520 Rent Expense 530 Utilities Expense\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{205 Accounts Payable—}\\ \text{105 Accounts Receivable—} & \text{Computer Horizons}\\ \text{Gabriel Cohen} & \text{207 Accounts Payable—}\\ \text{110 Accounts Receivable—} & \text{New Media Suppliers}\\ \text{James Coletti} & \text{301 Greg Failla, Capital}\\ \text{140 Computer Equipment} & \text{305 Greg Failla, Withdrawals}\\ \text{145 Video Tapes} & \text{401 Video Rental Revenue}\\ \text{ } & \text{405 VCR Rental Revenue}\\ \text{ } & \text{505 Equipment Repair Expense}\\ \text{ } & \text{520 Rent Expense}\\ \text{ } & \text{530 Utilities Expense}\\ \end{matrix}

For each transaction: 1. Prepare a T account for each account listed above. 2. Analyze and record each of the following transactions using the appropriate T accounts. Identify each transaction by number. 3. After recording all transactions, compute a balance for each account. 4. Test for the equality of debits and credits.

DateTransactionsJan. 11. Greg Failla invested $17,500 cash in Showbiz Video.32. Purchased computer equipment on account from Computer Horizons for $2,400.83. Purchased videos on account from New Media Suppliers for $375.104. Paid monthly rent of $750, Check 1183.135. Wrote Check 1184 to pay for new videos, $265.146. Sent a bill for $67 to Gabriel Cohen for a VCR rental.167. Deposited the receipts from video rentals, $233.198. Paid the gas and electric bill of $125, Check 1185.219. Sent Check 1186 for $375 to New Media Suppliers as payment on account.2210. Greg Failla withdrew $150 for his personal use, Check 1187.2511. Paid $45 for VCR repair, Check 1188.3012. Deposited VCR rental receipts of $264 in the bank.\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 1} & \text{1. Greg Failla invested $\$ 17,500$ cash in Showbiz Video.}\\ \text{3} & \text{2. Purchased computer equipment on account from Computer Horizons for $\$ 2,400$.}\\ \text{8} & \text{3. Purchased videos on account from New Media Suppliers for $\$ 375.$}\\ \text{10} & \text{4. Paid monthly rent of $\$ 750$, Check 1183.}\\ \text{13} & \text{5. Wrote Check 1184 to pay for new videos, $\$ 265$.}\\ \text{14} & \text{6. Sent a bill for $\$ 67$ to Gabriel Cohen for a VCR rental.}\\ \text{16} & \text{7. Deposited the receipts from video rentals, $\$ 233$.}\\ \text{19} & \text{8. Paid the gas and electric bill of $\$ 125,$ Check $1185 .$}\\ \text{21} & \text{9. Sent Check 1186 for $\$ 375$ to New Media Suppliers as payment on account.}\\ \text{22} & \text{10. Greg Failla withdrew $\$ 150$ for his personal use, Check $1187 .$}\\ \text{25} & \text{11. Paid $\$ 45$ for $\mathrm{VCR}$ repair, Check 1188.}\\ \text{30} & \text{12. Deposited VCR rental receipts of $\$ 264$ in the bank.}\\ \end{array}


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