Accounting problems

SOLUTION

Exercise 36

1 . Insurance expense 375

Prepaid insurance 375 ( 5months /24 months ) x 1 ,800

2 . Unearned rent 5 ,700

Rent revenue 5 ,700 (6months / 6 months ) x 5 ,700

3 . Office supplies expense 440

Office supplies 440 (200 480 - 440

4 . Depreciation expense 1 ,500

Accumulated depreciation 1 ,500 (6 ,000 x [3months /12months]

5 . Salaries expense 600

Accrued salaries 600 80 x 3 days 120 x 3 days

Exercise 37

First method - combined closing entry

Dry Cleaning Revenues 25 ,000 p

Laundry expense 4 ,000

Cleaning supplies expense 5 ,000

Depreciation expense 3 ,000

Rent expense 900

Salaries expense 2 ,400

Utilities expense 500

Retained earnings 9 ,200

Retained Earnings 8 ,000

Dividends 8 ,000 Another method of making the closing entries is

Dry Cleaning Revenues 25 ,000

Income Summary 25 ,000 Income Summary 15 ,800

Laundry expense 4 ,000

Cleaning supplies expense 5 ,000

Depreciation expense 3 ,000

Rent expense 900

Salaries expense 2 ,400

Utilities expense 500

Retained earnings 9 ,200

Income Summary 25 ,000 - 15 ,800 9 ,200

Retained earnings 9 ,200 Retained Earnings 8 ,000

Dividends 8 ,000

Exercise 38 SOLUTION Sinee the instruction is to Prepare the necessary general journal entries for the month of May , the solution is : NO journal entries will be made

Reason : All the transactions listed above occurred outside the month of May (The transactions occurred from October 5 to Oct 29 . Thus there are no business transactions during the month of May . Journal entries (May ) are only made if there are business transactions occurring within the time period (May

HOWEVER , the journal entries would have been the following if the transactions occurred in the same month of May (month of transaction

October 5

Salaries expense 4 ,000

Rent expense 500

Cash 4 ,500

October 8

Merchandise Inventory 25 ,000

Accounts Payable 25 ,000

October 12

Cash 25 ,000

Notes Payable 25 ,000

October 15

Accounts Payable 3 ,500

Merchandise Inventory 3 ,500 Accounts payable 21 ,500

Purchase discount 21 ,500 x .02 430

Cash ([ 25 ,000 -3 ,500]x .98 21 ,070

October 20 Accounts Receivable 20 ,000

Sales 20 ,000

Cost of Goods Sold 12 ,000

Merchandise Inventory 12 ,000

October 22 Prepaid Insurance 4 ,400

Cash 4 ,400

October 25

Sales Returns 2 ,000

Accounts Receivable 2 ,000

Merchandise Inventory 1 ,025

Cost of Goods Sold 1 ,025

October 29

Office Equipment 15 ,000

Cash 4 ,000

Notes Payable 11 ,000

Exercise 40

1

Entry Made

Prepaid Insurance 1 ,700

Accounts Payable 1 ,700

Should be

Prepaid Insurance 1 ,700

Cash 1 ,700

Adjusting entry

Accounts Payable 1 ,700

Cash 1 ,700

2

Entry Made

Cash 4 ,500

Sales Revenue 4 ,500

Should be

Cash 4 ,500

Accounts Receivable 4 ,500

Adjusting Entry

Sales Revenue 4 ,500

Accounts Receivable 4 ,500

3

Entry Made

Office Supplies 1 ,550

Accounts Payable 550

Cash 1 ,000

Should Be

Office Equipment 2 ,550

Accounts Payable 550

Cash 2 ,000

Adjusting Entry

Office Equipment 2 ,550

Office Supplies 1 ,550...