The following amounts summarize the financial position of Martin Resources, Inc., on May 31, 2012:
During June 2012, Martin Resources completed these transactions: a. The business received cash of $9,000 and issued common stock. b. Performed services for a customer and received cash of$6,800. c. Paid $4,700 on accounts payable. d. Purchased supplies on account,$1,200. e. Collected cash from a customer on account, $400. f. Consulted on the design of a computer system and billed the customer for services rendered,$2,400. g. Recorded the following business expenses for the month: (1) paid office rent—$1,400; (2) paid advertising—$900. h. Declared and paid a cash dividend of $1,700. Analyze the effects of the preceding transactions on the accounting equation of Martin Resources, Inc. Prepare the income statement of Martin Resources, Inc., for the month ended June 30, 2012. List expenses in decreasing order by amount. Prepare the entity’s statement of retained earnings for the month ended June 30, 2012. Prepare the balance sheet of Martin Resources, Inc., at June 30, 2012.
Step 11 of 13
In this problem, we are asked to analyze the effect of the transactions on the accounting equation of Martin Resources Inc.
The following are the beginning balance of the company's accounts:
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The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31, 2017. a. On July 31, the company’s Cash account has a $27,497 debit balance, but its July bank statement shows a$27,233 cash balance. b. Check No. 3031 for $1,482 and Check No. 3040 for$558 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $382 and Check No. 3069 for$2,281, both written in July, are not among the canceled checks on the July 31 statement. c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent expense was correctly written and drawn for $1,270 but was erroneously entered in the accounting records as$1,250. d. The July bank statement shows the bank collected $8,000 cash on a noninterest-bearing note for Branch, deducted a$45 collection expense, and credited the remainder to its account. Branch had not recorded this event before receiving the statement. e. The bank statement shows an $805 charge for a$795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF. f. The July statement shows a$25 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received. g. Branch’s July 31 daily cash receipts of $11,514 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement. 1. Prepare the bank reconciliation for this company as of July 31, 2017. 2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2017. 3. Assume that the July 31, 2017, bank reconciliation for this company is prepared and some items are treated incorrectly. For each of the following errors, explain the effect of the error on (i) the adjusted bank statement cash balance and (ii) the adjusted Cash account book balance. a. The company’s unadjusted Cash account balance of$27,497 is listed on the reconciliation as $27,947. b. The bank’s collection of the$8,000 note less the $45 collection fee is added to the bank statement cash balance on the reconciliation.
Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,028.05 and No. 5893 for$494.25. The following information is available for its September 30, 2017, reconciliation.
Check No. 5904 is correctly drawn for $2,090 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of$2,060. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum (CM) is from the collection of a $1,500 note for Chavez Company by the bank. The bank deducted a$15 collection expense. The collection and fee are not yet recorded. 1. Prepare the September 30, 2017, bank reconciliation for this company. 2. Prepare the journal entries (in dollars and cents) to adjust the book balance of cash to the reconciled balance. 3. The bank statement reveals that some of the prenumbered checks in the sequence are missing. Describe three situations that could explain this.
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