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The December 31 trial balance of Rivers Edge Canoe & Kayak is included in your working papers. 1. Calculate and record end-of-period adjustments on the work sheet. a. Ending Merchandise Inventory is $15,000. b. Supplies on hand total$1,450. c. The amount of the expired insurance premium is 5,000.d.Usethefollowinginformationtocalculatetheestimatedannualdepreciationexpenseusingthestraightlinemethod.5,000. d. Use the following information to calculate the estimated annual depreciation expense using the straight-line method.

  EstimatedEstimatedPlant AssetCostDisposal ValueUseful LifeStore Equipment$13,000$1,00010 yearsDelivery Truck32,0002,00010 yearsBuilding160,00010,00025 years\begin{array}{ll} \text{ } & \text{ } & \text{Estimated} & \text{Estimated}\\ \text{Plant Asset} & \text{Cost} & \text{Disposal Value} & \text{Useful Life}\\ \hline \text{Store Equipment} & \text{\$13,000} & \text{\$1,000} & \text{10 years}\\ \text{Delivery Truck} & \text{$32,000$} & \text{$2,000$} & \text{10 years}\\ \text{Building} & \text{$160,000$} & \text{$10,000$} & \text{25 years}\\ \end{array}

$e. The total federal income tax expense for the year is$4,250. 2. Complete the work sheet. 3. Journalize and post the adjusting entries on page 16 of the general journal. 4. Journalize and post the closing entries on page 16 of the general journal. Calculate the total depreciation expense for the year.

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.


The general ledger for Show biz Video shows the following at December 31:

General Ledger    101 Cash in Bank12,000207 Accts. Pay. - 105 Accts. Rec. - G. Cohen3,000New Media Suppliers3,000110 Accts. Rec. - J. Coletti900209 Accts. Pay. - Palace Films14,000113 Accts. Rec. - Flannery1,800301 Greg Failla, Capital33,775115 Accts. Rec. - Spring 305 Greg Failla, Withdrawals4,000Branch School District1,500310 Income Summary___130 Office Equipment5,000401 Video Rental Revenue9,600135 Office Furniture8,000405 VCR Rental Revenue3,500140 Computer Equipment10,000501 Advertising Expense1,600145 Video Tapes20,000505 Equipment Repair 150 Video Equipment9,000Expense1,200201 Accts. Pay. - Broad Street 510 Maintenance Expense400Office Supply400520 Rent Expense1,000205 Accts. Pay. 530 Utilities Expense375Computer Horizons15,500  \begin{array}{llll} \mathbf{\text{General Ledger }} & \text{ } & \text{ } & \text{ }\\ \text{101 Cash in Bank} & \text{$12,000$} & \text{207 Accts. Pay. -} & \text{ }\\ \text{105 Accts. Rec. - G. Cohen} & \text{$3,000$} & \text{New Media Suppliers} & \text{$3,000$}\\ \text{110 Accts. Rec. - J. Coletti} & \text{900} & \text{209 Accts. Pay. - Palace Films} & \text{$14,000$}\\ \text{113 Accts. Rec. - Flannery} & \text{$1,800$} & \text{301 Greg Failla, Capital} & \text{$33,775$}\\ \text{115 Accts. Rec. - Spring} & \text{ } & \text{305 Greg Failla, Withdrawals} & \text{$4,000$}\\ \text{Branch School District} & \text{$1,500$} & \text{310 Income Summary} & \text{\_\_\_}\\ \text{130 Office Equipment} & \text{$5,000$} & \text{401 Video Rental Revenue} & \text{$9,600$}\\ \text{135 Office Furniture} & \text{$8,000$} & \text{405 VCR Rental Revenue} & \text{$3,500$}\\ \text{140 Computer Equipment} & \text{$10,000$} & \text{501 Advertising Expense} & \text{$1,600$}\\ \text{145 Video Tapes} & \text{$20,000$} & \text{505 Equipment Repair} & \text{ }\\ \text{150 Video Equipment} & \text{$9,000$} & \text{Expense} & \text{$1,200$}\\ \text{201 Accts. Pay. - Broad Street} & \text{ } & \text{510 Maintenance Expense} & \text{400}\\ \text{Office Supply} & \text{400} & \text{520 Rent Expense} & \text{$1,000$}\\ \text{205 Accts. Pay.} & \text{ } & \text{530 Utilities Expense} & \text{375}\\ \text{Computer Horizons} & \text{15,500} & \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. Greg Failla invested $10,000 during the month. 3. Record the closing entries on page 12 of the general journal. 4. Post the closing entries. 5. Prepare a post-closing trial balance.


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