Thunder Cat Services specializes in training and veterinary services to household pets, such as dogs, birds, lizards, fish, horses, and of course, cats. After the first 11 months of operations in 2018, Thunder Cat has the following account balances:

$$\text{THUNDER CAT SERVICES}\\ \text{Trial Balance}\\ \text{November 30, 2018}\\ \begin{matrix} \text{Accounts} & \text{Debits} & \text{Credits}\\ \hline \text{Cash} & \text{$\$ 19,400$} & \text{ }\\ \text{Supplies} & \text{$1,500$} & \text{ }\\ \text{Prepaid Rent} & \text{$7,200$} & \text{ }\\ \text{Equipment} & \text{$83,700$} & \text{ }\\ \text{Buildings} & \text{$240,000$} & \text{ }\\ \text{Accounts Payable} & \text{ } & \text{$\$9,800$}\\ \text{Deferred Revenue} & \text{ } & \text{$2,000$}\\ \text{Common Stock} & \text{ } & \text{$125,000$}\\ \text{Retained Earnings} & \text{ } & \text{$75,500$}\\ \text{Dividends} & \text{9,000} & \text{ }\\ \text{Service Revenue} & \text{ } & \text{264,000}\\ \text{Salaries Expense} & \text{$65,000$} & \text{ }\\ \text{Advertising Expense} & \text{$18,200$} & \text{ }\\ \text{Utilities Expense} & \underline{32,300} & \text{\_\_\_\_\_}\\ \text{Totals} & \underline{\underline{\$ 476.300}} & \underline{\underline{\$ 476,300}}\\ \end{matrix}$$

The following transactions occur during December 2018:

$$\begin{matrix} \text{December 1- 31} & \text{Throughout the month, Thunder Cat provides services to customers for cash, $\$ 27,400$.}\\ \text{December 4} & \text{Purchase pet supplies on account, $\$ 2,900$ .}\\ \text{December 8} & \text{Pay for fliers to be distributed to local residences to advertise the company's services, $\$ 3,200$}\\ \text{December 9} & \text{Pay for supplies purchased on December $4 .$}\\ \text{December 12} & \text{Issue additional shares of common stock for cash, $\$ 5,000$ .}\\ \text{December 16} & \text{Pay cash on accounts payable, $\$ 6,300$ .}\\ \text{December 19} & \text{Purchase equipment with cash, $\$ 7700$ .}\\ \text{December 22} & \text{Pay utilities for December, $\$ 4,500 .$}\\ \text{December 24} & \text{Receive cash from customers for services to be provided next January, $\$ 2,300$ .}\\ \text{December 27} & \text{One of Thunder Cat's trainers takes a part-time job at the zoo and earns a}\\ \text{ } & \text{salary of $\$ 1,200$ . The zoo and Thunder Cat Services are separate companies.}\\ \text{December 30} & \text{Pay employee salaries for the current month, $\$ 7,000$ .}\\ \text{December 31} & \text{Pay dividends to stockholders, $\$ 3,000$ .}\\ \end{matrix}$$

1. Record each transaction. 2. Post each transaction to the appropriate T-accounts. 3. Calculate the balance of each account at December 31. 4. Prepare a trial balance as of December 31.

Jan's Jewelry has two departments: Costume and Fine. Post the following transactions when journalized: (1) transactions impacting the accounts payable subsidiary ledger, (2) transactions recorded in the general journal, and (3) cash payments entered in a general amount column of the cash payments journal. Journals and partial general and accounts payable ledgers are given in the Working Papers. Source documents are abbreviated as follows: check, C; debit memorandum, DM; purchase invoice, P. Instructions:

1. Journalize the transactions completed during August of the current year, Use page 8 of a purchases journal, page 8 of a general journal, and page 12 of a cash payments journal. Post the items that are to be posted individually.

2. Prove and rule the purchases journal. Post the totals.

3. Prove and rule the cash payments journal. Post the totals.

Transactions:

Aug. 1. Paid cash to Gallup Properties for rent, $2,400.00. C685.$    $2. Purchased fine jewelry on account from Austin Creations, \$4,367,00. P567.$    $3. Paid cash to Davis Office Source for supplies,$123.14, C686.

$\hspace{16pt}$ 4. Returned costume jewelry to Destin Crafters, $109.50, from P562. DM46.$    $6. Paid cash to Sanders Hardware for paint (miscellaneous expense), \$56.34. C687.$    $9. Returned fine jewelry to Austin Creations,$98.00, from PS07. DM47.

$\hspace{12pt}$ 10. Paid cash on account to Austin Creations covering P567 for fine jewelry for $4,367.00, less DM47 for$98.00, less 2% discount. C688.

$\hspace{12pt}$ 14. Paid cash to Williams Accessories for beads (costume jewelry), $275.00. C689.$    $16. Purchased costume jewelry on account from Jenkins Designs, \$4,642.00. P568.$    $21. Paid cash to City Electric Department for the utility bill,$512,12, C690.

$\hspace{12pt}$ 24. Paid cash on account to Jenkins Designs covering P568 for costume jewelry, $4,642.00, less 2$    $25. Purchased costume jewelry on account from Ketler Krafts, \$1,854.00. P569.$    $31. Paid cash to replenish the petty cash fund, $93.24: advertising for fine jewelry,$40.00; miscellaneous, $21.56; supplies,$31.68. C692.

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2017, follows. Descriptions of items a through h that require adjusting entries on December 31, 2017, follow.

Additional Information Items
a. An analysis of WTI's insurance policies shows that $2,400 of coverage has expired.
b. An inventory count shows that teaching supplies costing$2.800 are available at year-end 2017.
c. Annual depreciation on the equipment is $13,200.
d. Annual depreciation on the professional library is$7,200.
e. On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,500, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2018.
f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for$3,000 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.)
g. WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee.
h. The balance in the Prepaid Rent account represents rent for December.

$$\begin{array}{c} \textbf{WELLS TECHNICAL INSTITUTE}\\ \textbf{Unadjusted Trial Balance}\\ \textbf{December 31, 2017} \end{array}$$

	Debit	Credit
Cash	$34,000
Accounts receivable	0
Teaching supplies	8,000
Prepaid insurance	12,000
Prepaid rent	3,000
Professional library	35,000
Accumulated depreciation- professional library		$10,000
Equipment	80,000
Accumulated depreciation- equipment		15,000
Accounts payable		26,000
Salaries payable		0
Unearned training fees		12,500
T. Wells, Capital		90,000
T. Wells, Withdrawals	50,000
Tuition fees earned		123,900
Training fees earned		40,000
Depreciation expense- Professional libraries	0
Depreciation expense- equipment	0
Salaries expense	50,000
Insurance expense	0
Rent expense	33,000
Teaching supplies expense	0
Advertising expense	6,000
Utilities expense	6,400
Totals	$317,400	$317,400

Required

1. Prepare T-accounts (representing the ledger) with balances from the unadjusted trial balance.
2. Prepare the necessary adjusting journal entries for items a through h and post them to the T-accounts. Assume that adjusting entries are made only at year-end.
3. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial balance.
4. Prepare Wells Technical Institute's income statement and statement of owner's equity for the year 2017 and prepare its balance sheet as of December 31, 2017.

Star Studios is looking to purchase a new building for its upcoming film productions. The company finds a suitable location that has a list price of $1,600,000. The seller gives Star Studios the following purchase options: 1. Pay$1,600,000 immediately. 2. Pay $600,000 immediately and then pay$150,000 each year over the next 10 years, with the first payment due in one year. 3. Make 10 annual installments of $250,000, with the first payment due in one year. 4. Make a single payment of$2,300,000 at the end of five years. Determine the lowest-cost alternative for Star Studios, assuming that the company can borrow funds to finance the purchase at 8%.

You would like to start saving for retirement. Assuming you are now 25 years old and you want to retire at age 55, you have 30 years to watch your investment grow. You decide to invest in the stock market, which has earned about 13% per year over the past 80 years and is expected to continue at this rate. You decide to invest $2,000 at the end of each year for the next 30 years. Calculate how much your accumulated investment is expected to be in 30 years.

Sony introduces a new compact music player to compete with Apple's iPod that carries a two-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to be approximately 3% of sales. By the end of the first year of selling the product, total sales are $31 million, and actual warranty expenditures are$300,000. What amount (if any) should Sony report as a liability at the end of the year?

Below are the four primary financial statements. Match each financial statement with its primary purpose to investors.

$$\begin{matrix} \text{Financial Statements} & \text{Purposes}\\ \hline \text{1. \_\_\_\_\_ Income statement} & \text{a. Provides measures of resources and claims to those resources at the end of the year. }\\ \text{2. \_\_\_\_\_ Statement of stockholders' equity } & \text{b. Provides an indication of the company's ability to make a profit during the current year.}\\ \text{3. \_\_\_\_\_ Balance sheet} & \text{c. Provides a measure of net increases and decreases in cash for the current year.}\\ \text{4. \_\_\_\_\_ Statement of cash flows} & \text{d. Shows changes in owners' claims to resources for the current year. }\\ \end{matrix}$$

Eagle Corp. operates magnetic resonance imaging (MRI) clinics throughout the Northeast. At the end of the current period, the company reports the following amounts: Assets = $50,000; Liabilities =$27,000; Dividends = $3,000; Revenues =$14,000; Expenses = $9,000. Required: 1. Calculate net income. 2. Calculate stockholders' equity at the end of the period.

Below is a list of activities for Purple Cow Incorporated.

$$\begin{array}{c} \text{Transaction} & \text{Assets =} & \text{Liabilities + } & \text{Stockholders' Equity}\\ \text{1. Provide services to customers} & \text{ } & \text{ } & \text{ }\\ \text{on account, $\$ 1,600$ .} & \text{$+\$ 1,600$ =} & \text{$\$ 0$ +} & \text{$+\$ 1,600$}\\ \text{2. Pay $\$ 400$ for current month's rent.} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{3. Hire a new employee, who will} & \text{ } & \text{ } & \text{ }\\ \text{be paid $\$ 500$ at the end of each} & \text{ } & \text{ } & \text{ }\\ \text{month.} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{4. Pay $\$ 100$ for advertising aired in} & \text{ } & \text{ } & \text{ }\\ \text{the current period.} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{5. Purchase office supplies for} & \text{ } & \text{ } & \text{ }\\ \text{$\$ 400$ cash.} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{6. Receive cash of $\$ 1,000$ from} & \text{ } & \text{ } & \text{ }\\ \text{customers in (1) above.} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{7. Obtain a loan from the bank for} & \text{ } & \text{ } & \text{ }\\ \text{$\$ 7,000$ .} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{8. Receive a bill of $\$ 200$ for utility} & \text{ } & \text{ } & \text{ }\\ \text{costs in the current period.} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{9. Issue common stock for} & \text{ } & \text{ } & \text{ }\\ \text{$\$ 10,000$ cash.} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{10. Pay $\$ 500$ to employee in (3)} & \text{ } & \text{ } & \text{ }\\ \text{above.} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_} & \text{\_\_\_\_\_}\\ \text{Totals} & \text{\_\_\_\_\_ = } & \text{\_\_\_\_\_ +} & \text{\_\_\_\_\_ }\\ \end{array}$$

For each activity, indicate the impact on the accounting equation. After doing so for all transactions, ensure that the accounting equation remains in balance.

Eli owns an insurance office, while Olivia operates a maintenance service that provides basic custodial duties. For the month of May, the following transactions occurred.

$$\begin{matrix} \text{May 2} & \text{Olivia decides that she will need insurance for a one-day special event}\\ \text{ } & \text{at the end of the month and pays Eli $\$ 300$ in advance.}\\ \text{May 5} & \text{Olivia provides maintenance services to Eli's insurance offices on account, $\$ 425 .$}\\ \text{May 7} & \text{Eli borrows $\$ 500$ from Olivia by signing a note.}\\ \text{May14} & \text{Olivia purchases maintenance supplies from Spot Corporation, paying cash of $\$ 200$ .}\\ \text{May19} & \text{Eli pays $\$ 425$ to Olivia for maintenance services provided on May $5 .$}\\ \text{May25} & \text{Eli pays the utility bill for the month of May, $\$ 135 .$}\\ \text{May 28} & \text{Olivia receives insurance services from Eli equaling the amount paid on May $2 .$}\\ \text{May31} & \text{Eli pays $\$ 500$ to Olivia for money borrowed on May $7 .$}\\ \end{matrix}$$

Record each transaction for Eli's Insurance Services. Keep in mind that Eli may not need to record each transaction.

RiverHawk Expeditions provides guided tours in scenic mountainous areas. After the first 11 months of operations in 2018, RiverHawk has the following account balances. $$ \begin{matrix} \text{Accounts} & \text{Debits} & \text{Credits}\\ \text{Cash} & \text{$\$9,200$} & \text{ }\\ \text{Accounts Receivable} & \text{$4,500$} & \text{ }\\ \text{Prepaid Insurance} & \text{400} & \text{ }\\ \text{Equipment} & \text{$24,100$} & \text{ }\\ \text{Land} & \text{$170,000$} & \text{ }\\ \text{Accounts Payable} & \text{ } & \text{$\$3,300$}\\ \text{Notes Payable} & \text{ } & \text{$50,000$}\\ \text{Common Stock} & \text{ } & \text{$120,000$}\\ \text{Retained Earnings} & \text{ } & \text{$14,100$}\\ \text{Dividends} & \text{5,000} & \text{ }\\ \text{Service Revenue} & \text{ } & \text{75,000}\\ \text{Advertising Expense} & \text{$11,000$} & \text{ }\\ \text{Salaries Expense} & \text{$28,300$} & \text{ }\\ \text{Rent Expense} & \underline{9,900} & \text{\_\_\_\_\_ }\\ \text{Totals} & \underline{\underline{$ 262,400}} & \underline{\underline{\$ 262,400}}\\ \end{matrix} $$ The following transactions occur during December 2018: $$ \begin{matrix} \text{December 1} & \text{Pay rent for mountain lodges the month of December, \$900.}\\ \text{December 5} & \text{Provide guided tour to customers in Grand Teton National Park for cash, \$2,800.}\\ \text{December 8} & \text{Borrow from a local bank by signing a note payable, \$10,000. The note is due }\\ \text{ } & \text{in one year with a 6\\% interest rate.}\\ \text{December 12} & \text{Receive cash from customers as payment for a guided tour that occurred on}\\ \text{ } & \text{November 28, \$3,500.}\\ \text{December 13} & \text{Issue additional shares of common stock for cash, \$20,000.}\\ \text{December 15} & \text{Pay employee salaries for the first half of the month, \$1,200.}\\ \text{December 17} & \text{Purchase advertising on several local radio stations to be aired during the}\\ \text{ } & \text{following two weeks, \$1,000.}\\ \text{December 22} & \text{Provide guided tour to customers in Yellowstone National Park on account,}\\ \text{ } & \text{\$3,200.}\\ \text{December 23} & \text{One of the customers from the December 22 tour claims to have seen the}\\ \text{ } & \text{legendary creature Bigfoot. The company believes this exciting news will}\\ \text{ } & \text{create additional revenue of \$20,000 next year.}\\ \text{December 26} & \text{Purchase several pieces of hiking equipment to give customers a more}\\ \text{ } & \text{enjoyable adventure, such as night-vision goggles, GPS, long-range}\\ \text{ } & \text{binoculars, and video cameras, for cash, \$28,500.}\\ \text{December 28} & \text{Pay cash on accounts payable, \$1,500.}\\ \text{December 31} & \text{Pay dividends to stockholders, \$2,000.}\\ \end{matrix} $$ 1. Record each transaction. 2. Post each transaction to the appropriate T-accounts. 3. Calculate the balance of each account at December 31. 4. Prepare a trial balance as of December 31.

Buckeye Incorporated had the following balances at the beginning of November.

$$\text{BUCKEYE INCORPORATED Trial Balance}\\ \begin{matrix} \text{Accounts} & \text{Debits} & \text{Credits}\\ \hline \text{Cash} & \text{$\$ 3,200$}\\ \text{Accounts Receivable} & \text{600}\\ \text{Supplies} & \text{700}\\ \text{Equipment} & \text{$9,400$}\\ \text{Accounts Payable} & \text{ } & \text{$\$ 2,000$}\\ \text{Notes Payable} & \text{ } & \text{$4,000$}\\ \text{Common Stock} & \text{ } & \text{$7,000$}\\ \text{Retained Earnings} & \text{ } & \text{900}\\ \end{matrix}$$

The following transactions occur in November.

$$\begin{matrix} \text{November 1} & \text{Issue common stock in exchange for $\$ 13,000$ cash.}\\ \text{November 2} & \text{Purchase equipment with a long-term note for $\$ 3,500$ from Spartan Corporation.}\\ \text{November 4} & \text{Purchase supplies for $\$ 1,000$ on account.}\\ \text{November 10} & \text{Provide services to customers on account for $\$ 9,000$ .}\\ \text{November 15} & \text{Pay creditors on account, $\$ 1,100$ .}\\ \text{November 20} & \text{Pay employees $\$ 3,000$ for the first half of the month.}\\ \text{November 22} & \text{Provide services to customers for $\$ 11,000$ cash.}\\ \text{November 24} & \text{Pay $\$ 1,400$ on the note from Spartan Corporation.}\\ \text{November 26} & \text{Collect $\$ 7,000$ on account from customers.}\\ \text{November 28} & \text{Pay $\$ 1,100$ to the local utility company for November gas and electricity.}\\ \text{November 30} & \text{Pay $\$ 5,000$ rent for November.}\\ \end{matrix}$$

1. Record each transaction. 2. Post each transaction to the appropriate T-accounts. 3. Calculate the balance of each account at November 30. 4. Prepare a trial balance as of November 30.

Below are the transactions for Salukis Car Cleaning for June, the first month of operations.

$$\begin{matrix} \text{June 1} & \text{Obtain a loan of $\$ 70,000$ from the bank by signing a note.}\\ \text{June 2} & \text{Issue common stock in exchange for cash of $\$ 40,000$ .}\\ \text{June 7} & \text{Purchase car wash equipment for $\$ 75,000$ cash.}\\ \text{June 10} & \text{Purchase cleaning supplies of $\$ 8,000$ on account.}\\ \text{June 12} & \text{Wash 500 cars for $\$ 10$ each. All customers pay cash.}\\ \text{June 16} & \text{Pay employees $\$ 900$ for work performed.}\\ \text{June 19} & \text{Pay for advertising in a local newspaper, costing $\$ 500 .$}\\ \text{June 23} & \text{Wash 600 cars for $\$ 10$ each on account.}\\ \text{June 29} & \text{Pay employees $\$ 950$ for work performed.}\\ \text{June 30} & \text{A utility bill of $\$ 1,400$ for the current month is paid.}\\ \text{June 30} & \text{Pay dividends of $\$ 600$ to stockholders.}\\ \end{matrix}$$

1. Record each transaction. 2. Post each transaction to the appropriate T-accounts. 3. Calculate the balance of each account. 4. Prepare a trial balance for June. Salukis uses the following accounts: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Notes Payable, Common Stock, Dividends, Service Revenue, Salaries Expense, Advertising Expense, and Utilities Expense.

Rebel Technology maintains its records using cash-basis accounting. During the year, the company received cash from customers, $50,000, and paid cash for salaries,$21,900. At the beginning of the year, customers owe Rebel $1,100. By the end of the year, customers owe$8,000. At the beginning of the year, Rebel owes salaries of $7,000. At the end of the year, Rebel owes salaries of$4,000. Determine cash-basis net income and accrual-basis net income for the year.