The chart of accounts for Outback Guide Service follows.

$$\begin{array}{ll} \mathbf{\text{General Ledger }} & \text{ }\\ \text{101 Cash in Bank} & \text{301 Juanita Ortega, Capital}\\ \text{115 Accts. Rec. - Podaski} & \text{302 Juanita Ortega, Withdrawals}\\ \text{Systems Inc.} & \text{401 Guide Service Revenue}\\ \text{140 Computer Equipment} & \text{501 Advertising Expense}\\ \text{145 Hiking Equipment} & \text{ }\\ \text{150 Rafting Equipment} & \text{ }\\ \text{205 Accts. Pay. - Peak Equipment Inc.} & \text{ }\\ \text{207 Accts. Pay. - Premier Processors} & \text{ }\\ \end{array}$$

1. In your working papers, open an account in the general ledger for each account in the chart of accounts. 2. Record the following transactions on page 1 of the general journal. 3. Post each journal entry to the appropriate accounts in the ledger. 4. Prove the ledger by preparing a trial balance.

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \text{Mar. 1} & \text{Invested \$20,000 in cash and transferred rafting equipment }\\ \text{ } & \text{valued at \$5,000 to the business, Memorandum 35.}\\ \text{3} & \text{Purchased \$600 in hiking equipment on account from Peak}\\ \text{ } & \text{Equipment Inc., Invoice 101.}\\ \text{5} & \text{Bought a \$2,800 computer from Premier Processors and agreed}\\ \text{ } & \text{to pay for it within 60 days, Invoice 616.}\\ \text{7} & \text{Deposited \$700 cash received from clients, Receipts 310–315.}\\ \text{9} & \text{Paid \$400 to the Daily Courier for an ad, Check 652.}\\ \text{12} & \text{Sent a bill for \$900 to Podaski Systems Inc. for conducting a}\\ \text{ } & \text{group rafting trip for them, Sales Invoice 352.}\\ \text{15} & \text{Juanita Ortega wrote a check for \$800 for personal use, Check 653.}\\ \text{18} & \text{Paid Premier Processors \$1,400 to apply on account, Check 654.}\\ \text{22} & \text{Received \$900 from Podaski Systems Inc. in full payment for}\\ \text{ } & \text{the amount owed, Receipt 316.}\\ \text{27} & \text{Bought a \$500 television ad with LIVE TV, Check 655.}\\ \text{28} & \text{Paid Peak Equipment Inc. \$600 by writing Check 656. }\\ \end{array}$$

Calculate the total change in accounts payable.

The general ledger account balances on May 31 for Outback Guide Service are:

$$\begin{array}{lll} \text{101} & \text{Cash in Bank} & \text{$\$ 2,834$}\\ \text{105} & \text{Accts. Rec. - Mary Johnson} & \text{384}\\ \text{125} & \text{Office Supplies} & \text{307}\\ \text{130} & \text{Office Equipment} & \text{$5,902$}\\ \text{135} & \text{Office Furniture} & \text{$2,804$}\\ \text{140} & \text{Computer Equipment} & \text{$3,295$}\\ \text{145} & \text{Hiking Equipment} & \text{922}\\ \text{150} & \text{Rafting Equipment} & \text{$8,351$}\\ \text{205} & \text{Accts. Pay. - Peak Equipment Inc.} & \text{$1,204$}\\ \text{301} & \text{Juanita Ortega, Capital} & \text{$20,419$}\\ \text{302} & \text{Juanita Ortega, Withdrawals} & \text{$1,800$}\\ \text{310} & \text{Income Summary} & \text{\_\_\_}\\ \text{401} & \text{Guide Service Revenue} & \text{$9,179$}\\ \text{501} & \text{Advertising Expense} & \text{795}\\ \text{505} & \text{Maintenance Expense} & \text{125}\\ \text{515} & \text{Rent Expense} & \text{$2,000$}\\ \text{525} & \text{Utilities Expense} & \text{$1,283$}\\ \end{array}$$

Prepare a work sheet for Outback Guide Service for the period ended May 31 in your working papers. Compute the total assets for Outback.

Juanita Ortega is the owner of a professional guide service called Outback Guide Service. Use a form similar to the one below. Complete these steps for each of the following transactions: 1. Identify the accounts affected. 2. Write the amount of the increase (+) or decrease (-) in the space provided on the form in your working papers. 3. Determine the new balance for each account.

$$\begin{matrix} \text{ } & \text{ } & \text{ } & \text{Assets} & \text{ } & \text{ } & \text{$=$} & \text{Liabilities} & \text{$+$} & \text{Owner’s Equity}\\ \hline \text{Trans.} & \text{Cash in} & \text{Accts.} & \text{Hiking} & \text{Rafting} & \text{Office} & \text{$=$} & \text{Accounts} & \text{$+$} & \text{Juanita}\\ \text{ } & \text{Bank} & \text{Rec.} & \text{Equip.} & \text{Equip.} & \text{Equip.} & \text{ } & \text{Payable} & \text{ } & \text{Ortega,}\\ \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{ } & \text{Capital}\\ \end{matrix}$$

$$\begin{array}{rl} \text{Date} & \text{Transactions}\\ \hline \text{Jan. 3} & \text{1. Ms. Ortega, the owner, opened a checking account for the business by depositing $\$60,000$ of her personal funds.}\\ \text{6} & \text{2. Paid by check the monthly rent of $\$3,000$.}\\ \text{8} & \text{3. Bought hiking equipment for the business by writing a check for $\$3,000$.}\\ \text{9} & \text{4. Purchased $\$24,000$ of rafting equipment by writing a check. }\\ \text{11} & \text{5. Purchased office equipment on account for $\$4,000$.}\\ \text{15} & \text{6. Received payment for guide services, $\$2,500$.}\\ \text{18} & \text{7. Ms. Ortega contributed a desk valued at $\$450$ to the business.}\\ \text{21} & \text{8. Withdrew $\$3,000$ cash from the business for personal use.}\\ \text{26} & \text{9. Wrote a check to a creditor as partial payment on account, $\$1,500$. }\\ \text{30} & \text{10. Took a group on a tour and agreed to accept payment later, $\$1,200$.}\\ \end{array}$$

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.

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

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

On October 31 Juanita Ortega, owner of Outback Guide Service, received a bank statement dated October 30. Juanita found the following: 1. The checkbook has a balance of $2,551.34. 2. The bank statement shows a balance of$2,272.36. 3. The statement shows a bank service charge of $20.00. 4. A check from Podaski Systems for$62.44, deposited on October 18, was returned by the bank. There is no fee for handling the NSF check. 5. A deposit of $672.48 made on October 30 does not appear on the bank statement. 6. These checks are outstanding: Check 872 for$126.84 Check 883 for $192.80 Check 881 for$87.66 Check 887 for 68.64 Using the preceding information: 1. Record the service charge and the NSF check in the checkbook. 2. Reconcile the bank statement. 3. Record the service charge and NSF check on page 7 of the general journal. 4. Post the journal entries to the appropriate general ledger accounts.

On July 7 Video Connection’s accounting supervisor discovered that a July 3 transaction had been recorded incorrectly. The transaction, involving the purchase of advertising in the local newspaper with a $300 check, was incorrectly journalized and posted to the Rent Expense account. In your working papers, record and post the correcting entry using the Memorandum as the source document.$

$$\begin{array}{ll} \text{VIDEO} & \text{ }\\ \text{Connection} & \text{ }\\ \text{TO:} & \text{Accounting Clerk}\\ \text{FROM:} & \text{Accounting Manager}\\ \text{DATE:} & \text{July $7,20-$}\\ \text{SUBJECT:} & \text{Correction of error}\\ \end{array}$$

$On July 3, we paid$300 for advertising in the Daily News Record that was incorrectly journalized and posted to the Rent Expense account. Please record the necessary entry to correct this error.

The accounts used by Wilderness Rentals have been opened and are included in the working papers accompanying this textbook. The general journal transactions for March of the current year are also included.

List the following steps of the accounting cycle in their proper order. Use the form provided in your working papers or a separate sheet of paper. Analyzing business transactions, Collecting and verifying source documents, Completing the work sheet, Journalizing business transactions, Journalizing and posting adjusting entries, Journalizing and posting closing entries, Posting journal entries to ledgers, Preparing financial statements, Preparing a post-closing trial balance, Preparing a trial balance

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

$$\begin{matrix} \text{General Ledger} & \text{ }\\ \hline \text{101 Cash in Bank} & \text{207 Accts. Pay.—New Media Suppliers}\\ \text{105 Accts. Rec.—G. Cohen} & \text{209 Accts. Pay.—Palace Films}\\ \text{110 Accts. Rec.—J. Coletti} & \text{301 Greg Failla, Capital}\\ \text{113 Accts. Rec.—S. Flannery} & \text{305 Greg Failla, Withdrawals}\\ \text{115 Accts. Rec.—Spring} & \text{310 Income Summary}\\ \text{Branch School District} & \text{401 Video Rental Revenue}\\ \text{130 Office Equipment} & \text{405 VCR Rental Revenue}\\ \text{135 Office Furniture} & \text{501 Advertising Expense}\\ \text{140 Computer Equipment} & \text{505 Equipment Repair Expense}\\ \text{145 Video Tapes} & \text{510 Maintenance Expense}\\ \text{150 Video Equipment} & \text{520 Rent Expense}\\ \text{201 Accts. Pay.—Broad Street} & \text{525 Salaries Expense}\\ \text{Office Supply} & \text{530 Utilities Expense}\\ \text{205 Accts. Pay.—Computer} & \text{ }\\ \text{Horizons} & \text{ }\\ \end{matrix}$$

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

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

At the end of December, the general ledger for Job Connect showed the following account balances:

$$\begin{array}{ll} \mathbf{\text{General Ledger }} & \text{ } & \text{ } & \text{ }\\ \text{101 Cash in Bank} & \text{6,000} & \text{207 Accts. Pay. - Wildwood} & \text{ }\\ \text{105 Accts. Rec. -} & \text{ } & \text{Furniture Sales} & \text{$2,000$}\\ \text{CompuRite Systems} & \text{1,000} & \text{301 Richard Tang, Capital} & \text{$23,600$}\\ \text{110 Accts. Rec. $-$} & \text{ } & \text{302 Richard Tang,} & \text{ }\\ \text{Marquez Manufact.} & \text{500} & \text{Withdrawals} & \text{3,000}\\ \text{113 Accts. Rec. - Roaring} & \text{ } & \text{303 Income Summary} & \text{\_\_\_}\\ \text{Rivers Water Park} & \text{600} & \text{401 Placement Fees Revenue} & \text{6,900}\\ \text{115 Accts. Rec. $-$ M. Spencer} & \text{200} & \text{405 Technology Classes} & \text{ }\\ \text{130 Office Equipment} & \text{$7,000$} & \text{Revenue} & \text{$2,400$}\\ \text{135 Office Furniture} & \text{$5,000$} & \text{501 Advertising Expense} & \text{$3,000$}\\ \text{140 Computer Equipment} & \text{$8,500$} & \text{505 Maintenance Expense} & \text{800}\\ \text{201 Accts. Pay. - Micro} & \text{ } & \text{510 Miscellaneous Expense} & \text{800}\\ \text{Solutions Inc.} & \text{2,800} & \text{520 Rent Expense} & \text{$2,000$}\\ \text{205 Accts. Pay. - Vega} & \text{ } & \text{530 Utilities Expense} & \text{900}\\ \text{Internet Services} & \text{1,600} & \text{ } & \text{ }\\ \end{array}$$

Using the preceding account names and balances: 1. Prepare the six-column work sheet. The period covered is one month. 2. Prepare the financial statements. 3. Record the closing entries on page 28 of the general journal. 4. Post the closing entries. 5. Prepare a post-closing trial balance.

The ledger accounts for Hot Suds Car Wash are shown in your working papers. Prepare a trial balance as of March 31 of the current year.