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Title: Accountin Cycle Excersise ii
Description: This exercise book is the second of four exercise books that correspond directly with the Accounting Cycle textbook. The exercises relate specifically to Part 2 of the Accounting Cycle textbook and focus on information processing. The exercises cover accounts, debits, credits, assets, expenses, dividends, liabilities, revenues, and equity. The exercises also cover basic accounting activities such as journalizing transactions, posting to the general ledger, preparing a trial balance, and understanding account balances.
Description: This exercise book is the second of four exercise books that correspond directly with the Accounting Cycle textbook. The exercises relate specifically to Part 2 of the Accounting Cycle textbook and focus on information processing. The exercises cover accounts, debits, credits, assets, expenses, dividends, liabilities, revenues, and equity. The exercises also cover basic accounting activities such as journalizing transactions, posting to the general ledger, preparing a trial balance, and understanding account balances.
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Accounting Cycle Exercises II
Larry M
...
Skousen
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Larry M
...
Skousen
Accounting Cycle Exercises II
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...
Walther & Christopher J
...
com
All material in this publication is copyrighted, and the exclusive property of
Larry M
...
ISBN 978-87-7681-628-5
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Accounting Cycle Exercises II
Contents
Problem 5
24
Worksheet 5
24
Solution 5
26
Problem 6
29
Worksheet 6 (a)
30
Worksheet 6 (b)
32
Worksheet 6 (c)
34
Solution 6 (a)
35
Solution 6 (b)
37
Solution 6 (c)
39
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thinking
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thinking
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© Deloitte & Touche LLP and affiliated entities
...
com
Deloitte & Touche LLP and affiliated entities
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deloitte
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Dis
Accounting Cycle Exercises II
Contents
Problem 7
40
Worksheet 7 (a)
41
Worksheet (b)
44
Worksheet 7 (d)
46
Worksheet 7 (e)
46
Solution 7 (a)
48
Solution 7 (b)
51
Solution 7 (d)
53
Solution 7 (e)
54
Problem 8
56
Worksheet 8 (a)
57
Worksheet 8 (c)
59
Solution 8 (a)
59
Solution 8 (c)
61
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Accounting Cycle Exercises II
Problem 1
Problem 1
“Robert Dennis formed a corporation to provide concrete construction work
...
Robert provided the following information about
transactions occurring during the first month of operation
...
Jan
...
Jan
...
Jan
...
Jan
...
Jan
...
Jan
...
Jan
...
Jan
...
Jan
...
Jan
...
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com
8
Credit
Accounting Cycle Exercises II
Problem 1
Solution 1
GENERAL JOURNAL
Date
1-2X5
Accounts
Debit
Cash
Credit
20,000
Capital Stock
20,000
Issued stock to Robert Dennis for cash
1-4-X5
Equipment
15,000
Accounts Payable
15,000
Purchased equipment on account
1-12-X5
Cash
30,000
Revenues
30,000
Provided services to customers for cash
1-15-X5
Supplies Expense
4,000
Accounts Payable
4,000
Received bill for cost of supplies
1-18-X5
Accounts Receivable
6,400
Revenues
6,400
Provided services to customers on account
1-20-X5
Wage Expense
2,300
Cash
2,300
Paid wages of employees
1-22-X5
Cash
3,840
Accounts Receivable
3,840
Collected 60% of the amount due from the
transaction of Jan
...
4 ($15,000 X 40% = $6,000)
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10
Accounting Cycle Exercises II
Problem 2
Problem 2
Anthony Moore recently formed an information technology services and consulting firm in England
...
But, he did understand the need to keep track of all transactions as they occurred
...
All amounts
are in the British Pound
...
He needs this data in order to begin the process of transitioning
to his new computerized accounting system
...
com/Mitas
www
...
com
Ma
Month 16
I was a construction
Mo
supervisor ina const
I was
the North Sea super
advising and the No
he
helping foremen advis
s Real work
solve problems
he
helping fo
International
Internationa opportunities
al
�ree wo placements
work
or
s
solve pr
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7
15-Jan-05
Wage Expense
300,000
Cash
300,000
Paid employee
17-Jan-05
Cash
450,000
Accounts Receivable
450,000
Collected partial payment on receivables
18-Jan-05
Cash
540,000
Revenues
540,000
Provided services to customers for cash
20-Jan-05
Supplies Expense
60,000
Accounts Payable
60,000
Purchased (on account) and used supplies
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13
Balance
-
-
Accounting Cycle Exercises II
Problem 2
ACCOUNTS PAYABLE
Date
01-Jan-05
Description
Debit
Credit
Balance forward
-
Balance
-
-
LOAN PAYABLE
Date
Description
01-Jan-05
Debit
Balance forward
Credit
-
Balance
-
-
CAPITAL STOCK
Date
01-Jan-05
Description
Debit
Balance forward
Credit
-
Balance
-
-
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15
Accounting Cycle Exercises II
Problem 2
ACCOUNTS RECEIVABLE
Date
Description
01-Jan-05
Balance forward
06-Jan-05
17-Jan-05
Debit
Credit
Balance
-
-
-
Journal Page 1
900,000
-
900,000
Journal Page 2
-
450,000
450,000
EQUIPMENT
Date
Description
01-Jan-05
Journal Page 1
Credit
Balance forward
04-Jan-05
Debit
Balance
-
-
-
600,000
-
600,000
ACCOUNTS PAYABLE
Date
Description
Debit
Credit
Balance
01-Jan-05
Balance forward
-
-
-
07-Jan-05
Journal Page 1
-
30,000
30,000
11-Jan-05
Journal Page 1
30,000
-
-
20-Jan-05
Journal Page 2
-
60,000
60,000
LOAN PAYABLE
Date
Description
Debit
Credit
Balance
01-Jan-05
Balance forward
-
-
-
04-Jan-05
Journal Page 1
-
600,000
600,000
31-Jan-05
Journal Page 2
600,000
-
-
CAPITAL STOCK
Date
Description
Debit
Credit
Balance
01-Jan-05
Balance forward
-
-
-
02-Jan-05
Journal Page 1
-
3,000,000
3,000,000
REVENUES
Date
Description
Debit
01-Jan-05
Credit
Balance
-
-
-
06-Jan-05
Journal Page 1
-
900,000
900,000
18-Jan-05
Journal Page 2
-
540,000
1,440,000
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Accounting Cycle Exercises II
Problem 3
Problem 3
The CEO of newly formed TrueTarget printed a copy of the company’s general ledger prior to a recent
plane flight
...
Once airborne, she removed the
printed “GL” from her brief case and began examining the report
...
She is frustrated because she is not able to determine
the company’s exact profitability to date, and is on her way to a shareholder meeting where she is to
issue a report on the company’s progress
...
Prepare a trial balance from the general ledger, determine the missing amount for salaries expense, and
determine the company’s profit for its first month
...
com
-
225,000
Accounting Cycle Exercises II
Problem 3
SALARIES PAYABLE
Date
Description
Debit
Credit
Balance
02-Jan-08
Balance forward
-
-
-
31-Jan-08
Journal Page 2
-
54,000
54,000
CAPITAL STOCK
Date
Description
Debit
Credit
Balance
02-Jan-08
Balance forward
-
-
-
03-Jan-08
Journal Page 1
-
750,000
750,000
REVENUES
Date
Description
Debit
Credit
02-Jan-08
Balance
-
-
-
06-Jan-08
Journal Page 1
-
165,000
165,000
31-Jan-08
Journal Page 2
-
78,000
243,000
SUPPLIES EXPENSE
Date
Description
Debit
Credit
02-Jan-08
26-Jan-08
Balance
-
-
9,000
Journal Page 2
-
9,000
UTILITIES EXPENSE
Date
Description
Debit
02-Jan-08
21-Jan-08
Credit
Balance
-
-
12,000
Journal Page 2
-
12,000
SALARIES EXPENSE
Date
Description
Debit
02-Jan-08
Credit
-
14-Jan-08
Journal Page 1
31-Jan-08
45,000
Journal Page 2
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TrueTarget was profitable, because revenues ($243,000) exceeded expenses ($9,000 + $12,000 +
$99,000 = $40,000)
...
com
20
Accounting Cycle Exercises II
Problem 4
Problem 4
The following narratives describe transactions impacting cash, accounts receivable, accounts payable,
revenues, and selected expense accounts
...
At the beginning of the period, accounts
receivable totaled $108,600, while accounts payable totaled $62,550
...
Transaction #1
Services were provided to customers for cash in the amount of $30,460
...
This purchase occurred on account,
in the amount of $4,800
...
Transaction #4
Utilities costs in the amount of $1,526 were incurred and paid in cash
...
Transaction #6
Services were provided to customers on account in the amount
of $97,308
...
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Accounting Cycle Exercises II
Problem 4
ACCOUNTS RECEIVABLE
1/1/X1
108,600
SUPPLIES EXPENSE
#3
#2
62,550
1/1/X1
#4
4,800
#6
38,820
4,800
#2
97,308
205,908
38,820
167,088
ACCOUNTS PAYABLE
#5
47,800
47,800
UTILITIES EXPENSE
1,526
67,350
19,550
The T-accounts reveal that ending Accounts Receivable amount to $167,088, and ending Accounts
Payable amount to $19,550
...
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Accounting Cycle Exercises II
Problem 5
Problem 5
Monte Ishiola distributes electronic parts
...
But, Monte has five major customers that have established accounts
...
The terms of the credit agreement provide that payment must occur
within 30 days, and each customer has a maximum credit limit of $30,000
...
Purchases on account on May 5, $21,711
...
Customer #2
Beginning balance, $15,825
...
Payment on account on May 26, $12,825
...
Purchase on account on May 9, $28,650
...
Purchase on account on May 7, $6,300
...
Payment on account on
May 11, $22,671
...
Payment on account on May 18, $8,970
...
b) Prepare the general ledger Accounts Receivable “control” account
...
c) What is the purpose of a subsidiary ledger? What other control accounts might be
supported by subsidiary ledgers?
d) Review Monte’s subsidiary ledgers and identify which customer should be put on credit
watch for being delinquent, and which customer has exceeded their credit limit
...
com
24
Accounting Cycle Exercises II
Problem 5
ACCOUNTS RECEIVABLE
Date
Description
May 1
Debit
Balance forward
Customer #2
Credit
15,825
Balance
-
15,825
May 15
May 26
ACCOUNTS RECEIVABLE
Date
Description
Debit
Credit
ACCOUNTS RECEIVABLE
Date
Description
Debit
Description
Debit
Balance
Customer #4
Credit
Accounts receivable
Date
Customer #3
Balance
Customer #5
Credit
Balance
b) Below is the general ledger account
ACCOUNTS RECEIVABLE
Date
01-Jan-05
May 5
Description
Debit
Balance forward
Credit
Balance
-
May 7
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c)
d) Customer # is delinquent
...
Solution 5
a)
ACCOUNTS RECEIVABLE
Date
Description
May 1
Balance forward
May 5
May 17
Debit
Customer #1
Credit
Balance
4,209
-
4,209
Purchase – Journal page X
21,711
-
25,920
Payment – Journal page X
-
4,209
21,711
...
com
26
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Accounting Cycle Exercises II
Problem 5
ACCOUNTS RECEIVABLE
Date
Description
May 1
Balance forward
May 15
May 26
Debit
Credit
-
15,825
Purchase – Journal page X
6,825
-
22,650
Payment – Journal page X
-
12,825
9,825
Description
Customer #3
Debit
May 1
May 9
Purchase – Journal page X
Credit
Balance forward
Balance
-
-
-
28,650
-
28,650
ACCOUNTS RECEIVABLE
Date
Balance
15,825
ACCOUNTS RECEIVABLE
Date
Customer #2
Description
Debit
Customer #4
Credit
Balance
May 1
Balance forward
22,671
-
22,671
May 7
Purchase – Journal page X
6,300
-
28,971
May 11
Payment – Journal page X
-
22,671
6,300
May 22
Purchase – Journal page X
28,332
-
34,632
ACCOUNTS RECEIVABLE
Date
Description
Debit
May 1
Balance forward
May 18
Payment – Journal page X
Customer #5
Credit
Balance
8,970
-
8,970
-
8,970
-
b)
ACCOUNTS RECEIVABLE
Date
01-Jan-05
Description
Customer #2
Debit
Balance forward
Credit
Balance
-
-
51,675
May 5
Purchase – Journal page X
21,711
-
73,386
May 7
Purchase – Journal page X
6,300
-
79,686
May 9
Purchase – Journal page X
28,650
-
108,336
May 11
Payment – Journal page X
-
22,671
92,490
May 15
Purchase – Journal page X
6,825
-
115,161
May 17
Payment – Journal page X
-
4,209
88,281
May 18
Payment – Journal page X
-
8,970
79,311
May 22
Purchase – Journal page X
28,332
-
107,643
May 26
Payment – Journal page X
-
12,825
94,818
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This is an important
reconciliation that should occur on a regular basis
...
c) Subsidiary ledgers provide detailed information about the transactions with specific
customers, vendors, and so forth
...
This information is very useful for many purposes, including
preparing monthly billing statements for specific customers
...
d) Customer #2 is delinquent
...
A portion of the beginning balance has been outstanding
for more than the agreed 30-day period
...
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June 3
Hired an administrative assistant, to be paid $6,000 per month
...
Signed a contract with Bangalore to deliver
consulting services valued at $15,000
...
June 9
Received $5,000 from Bangalore for work performed to date
...
June 16
Provided services on account to Amalga for $6,000
...
June 23
Billed Wheel for $8,000 consulting engagement performed
...
June 26
Collected 50% of the amount due for the billing on June 23
...
June 27
Paid $1,500 on the open account relating to the June 8 purchase
...
June 30
Paid $3,000 to administrative assistant for salary
...
Pryor consulting uses the following accounts:
Cash
Accounts Receivable
Equipment
Accounts Payable
Capital Stock
Revenues
Salary Expense
Rent Expense
Travel Expense
Supplies Expense
Dividends
a) Journalize the listed transactions
...
c) Prepare a trial balance as of June 30
...
com
29
Accounting Cycle Exercises II
Problem 6
Worksheet 6 (a)
GENERAL JOURNAL
Date
June 2
Accounts
Debit
Cash
Capital Stock
Sudipta Gumm invested $50,000
cash in the capital stock of the newly
formed corporation
...
Received $5,000 from Bangalore for work
performed to date
...
Provided services on account to Amalga
for $6,000
...
Billed Wheel for $8,000 consulting
engagement performed
...
com
30
Credit
Accounting Cycle Exercises II
Problem 6
The company paid Sudipta Gumm
$2,000 dividend
...
Purchased computer furniture for $8,000,
paying $2,000 down
...
Completed the Bangalore job and billed the
remaining amount
...
Paid rent for June, $2,000
...
com
31
Accounting Cycle Exercises II
Problem 6
Worksheet 6 (b)
CASH
Date
June 1
Description
Debit
Balance forward
Credit
Balance
-
-
50,000
Journal Page 1
-
50,000
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Accounting Cycle Exercises II
Problem 6
ACCOUNTS RECEIVABLE
Date
June 1
Description
Debit
Credit
Balance forward
Balance
-
-
-
EQUIPMENT
Date
June 1
Description
Debit
Credit
Balance forward
-
Balance
-
-
ACCOUNTS PAYABLE
Date
June 1
Description
Debit
Credit
Balance forward
Balance
-
-
-
Capital stock
Date
June 1
Description
Debit
Credit
Balance
Balance forward
-
-
-
Journal Page 1
-
50,000
50,000
DIVIDENDS
Date
Description
Debit
June 1
Credit
-
Balance
-
-
REVENUES
Date
Description
Debit
June 1
Credit
-
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34
Credits
-
Accounting Cycle Exercises II
Problem 6
Solution 6 (a)
GENERAL JOURNAL
Date
June 2
Accounts
Debit
Cash
Credit
50,000
Capital Stock
50,000
Sudipta Gumm invested $50,000
cash in the capital stock of the newly
formed corporation
...
June 9
Cash
5,000
Revenues
5,000
Received $5,000 from Bangalore for work
performed to date
...
June 16
Accounts Receivable
6,000
Revenues
6,000
Provided services on account to Amalga
for $6,000
...
June 23
Accounts Receivable
8,000
Revenues
8,000
Billed Wheel for $8,000 consulting
engagement performed
...
com
35
Accounting Cycle Exercises II
June 25
Problem 6
Dividends
2,000
Cash
2,000
The company paid Sudipta Gumm
$2,000 dividend
...
June 27
Equipment
8,000
Cash
2,000
Accounts Payable
6,000
Purchased computer furniture for $8,000,
paying $2,000 down
...
June 28
Accounts Receivable
10,000
Revenues
10,000
Completed the Bangalore job and billed the
remaining amount
...
June 30
Rent Expense
1,000
Cash
1,000
Paid rent for June, $2,000
...
com
36
Accounting Cycle Exercises II
Problem 7
Solution 6 (b)
CASH
Date
Description
June 1
Balance forward
June 2
Debit
Credit
Balance
-
-
-
Journal Page 1
50,000
-
50,000
June 9
Journal Page 1
5,000
-
55,000
June 15
Journal Page 1
-
2,400
52,600
June 17
Journal Page 1
-
3,000
49,600
June 25
Journal Page 2
-
2,000
47,600
June 26
Journal Page 2
4,000
-
51,600
June 27
Journal Page 2
-
2,000
49,600
June 27
Journal Page 2
-
1,500
48,100
June 30
Journal Page 3
-
3,000
45,100
June 30
Journal Page 3
-
2,000
43,100
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38
Accounting Cycle Exercises II
Problem 7
SALARY EXPENSE
Date
Description
Debit
Credit
June 1
Balance
-
-
-
June 17
Journal Page 1
3,000
-
3,000
June 30
Journal Page 3
3,000
-
6,000
RENT EXPENSE
Date
Description
Debit
Credit
June 1
June 30
Balance
-
-
2,000
Journal Page 3
-
2,000
TRAVEL EXPENSE
Date
Description
Debit
June 1
Credit
Balance
-
June 15
-
2,400
Journal Page 1
-
2,400
SUPPLIES EXPENSE
Date
Description
Debit
June 1
June 8
Credit
Balance
-
-
1,500
Journal Page 1
-
1,500
Solution 6 (c)
STUDIPTA GUMM CONSULTING
Trial Balance
June 30, 20XX
Debits
Credits
$ 43,100
$ -
20,000
-
8,000
-
Accounts Payable
-
6,000
Capital Stock
-
50,000
Revenues
-
29,000
Salary Expense
6,000
-
Rent Expense
2,000
-
Travel Expense
2,400
-
Supplies Expense
1,500
-
Dividends
2,000
-
$ 85,000
$ 85,000
Cash
Accounts Receivable
Equipment
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...
2
Collected $40,000 on an open account receivable
...
3
Purchased additional tract of land for $80,000 cash
...
5
Provided services on account to a customer for $60,000
...
7
Borrowed $48,000 on a term loan payable
...
11
Paid salaries of $12,000
...
12
Provided services to customers for cash, $44,000
...
15
Purchased (and used) office supplies on account, $8,000
...
17
The company paid shareholders a $10,000 dividend
...
20
Paid rent of $6,800
...
23
Paid salaries of $16,000
...
24
Paid $64,000 on the open accounts payable
...
29
Collected $200,000 on accounts receivable
...
31
Repaid loans of $88,000
...
31
Paid interest on loans of $2,400
...
com
40
Accounting Cycle Exercises II
Problem 7
a) Create the general ledger accounts, and enter the initial balances at the start of the month of
January
...
b) Prepare journal entries for January’s transactions
...
d) Prepare a trial balance as of January 31
...
Worksheet 7 (a)
CASH
Date
Jan
...
1
Description
Debit
Balance forward
Credit
-
Balance
-
300,000
LAND
Date
Jan
...
com
41
Balance
-
600,000
Accounting Cycle Exercises II
Problem 7
ACCOUNTS PAYABLE
Date
Jan
...
1
Description
Debit
Credit
Balance forward
-
Balance
-
120,000
CAPITAL STOCK
Date
Jan
...
1
Description
Debit
Balance forward
Credit
-
Balance
-
440,000
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1
Credit
-
Balance
-
-
REVENUES
Date
Description
Debit
Credit
Jan
...
1
Credit
-
Balance
-
-
SUPPLIES EXPENSE
Date
Description
Debit
Jan
...
1
Credit
-
Balance
-
-
INTEREST EXPENSE
Date
Description
Debit
Jan
...
com
43
Balance
-
-
Accounting Cycle Exercises II
Problem 7
Worksheet (b)
GENERAL JOURNAL
Date
Accounts
Debit
Jan
...
3
Jan
...
7
Jan
...
12
Jan
...
17
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20
Jan
...
24
Jan
...
31
Jan
...
com
45
Accounting Cycle Exercises II
Problem 7
Worksheet 7 (d)
HAGEN CORPORATION
Trial Balance
January 31, 20X6
Debits
$ -
Cash
Credits
$ -
Accounts Receivable
Land
Accounts Payable
Loan Payable
Capital Stock
Retained Earnings
Revenues
104,000
Salaries Expense
28,000
Supplies Expense
8,000
Rent Expense
6,800
Interest Expense
2,400
Dividends
10,000
-
$ 55,200
$ 104,000
Worksheet 7 (e)
HAGEN CORPORATION
Income Statement
For the Month Ending January 31, 20X6
Revenues
Services to customers
Expenses
Salaries
Supplies
Rent
Interest
Net income
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47
Accounting Cycle Exercises II
Problem 7
Solution 7 (a)
CASH
Date
Description
Jan
...
2
Debit
Credit
Balance
-
-
100,000
Journal Page 1
40,000
-
140,000
Jan
...
7
Journal Page 1
48,000
-
108,000
Jan
...
12
Journal Page 1
44,000
-
140,000
Jan
...
20
Journal Page 2
-
6,800
123,200
Jan
...
24
Journal Page 2
-
64,000
43,200
Jan
...
31
Journal Page 3
-
88,000
155,200
Jan
...
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1
Balance forward
-
-
300,000
Jan
...
5
Journal Page 1
60,000
-
320,000
Jan
...
1
Journal Page 1
Credit
Balance forward
Jan
...
1
Balance forward
-
-
240,000
Jan
...
24
Journal Page 2
64,000
-
184,000
LOAN PAYABLE
Date
Description
Debit
Credit
Balance
Jan
...
7
Journal Page 1
-
48,000
168,000
Jan
...
1
Description
Debit
Balance forward
Credit
-
Balance
-
200,000
RETAINED EARNINGS
Date
Jan
...
1
Jan
...
com
49
-
10,000
Journal Page 2
-
10,000
Accounting Cycle Exercises II
Problem 7
REVENUES
Date
Description
Debit
Credit
Jan
...
5
Journal Page 1
-
60,000
60,000
Jan
...
1
Balance
-
-
-
Jan
...
23
Journal Page 2
16,000
-
28,000
SUPPLIES EXPENSE
Date
Description
Debit
Credit
Jan
...
15
Balance
-
-
8,000
Journal Page 2
-
8,000
RENT EXPENSE
Date
Description
Debit
Jan
...
20
Credit
Balance
-
-
6,800
Journal Page 2
-
6,800
INTEREST EXPENSE
Date
Description
Debit
Jan
...
31
Credit
Balance
-
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2
Accounts
Debit
Cash
√
Accounts Receivable
Credit
40,000
40,000
√
Collected $40,000 on an open
account receivable
...
3
Land
√
Cash
80,000
80,000
√
Purchased additional tract of land for
$80,000 cash
...
5
Accounts Receivable
√
Revenues
60,000
60,000
√
Provided services on account to a customer
for $60,000
...
7
Cash
√
Loan Payable
48,000
48,000
√
Borrowed $48,000 on a term loan payable
...
11
Salaries Expense
√
Cash
12,000
12,000
√
Paid salaries of $12,000
...
12
Cash
√
Revenues
44,000
44,000
√
Provided services to customers for
cash, $44,000
...
15
Supplies Expense
√
Accounts Payable
8,000
8,000
√
Purchased (and used) office supplies on
account, $8,000
...
17
Dividends
√
Cash
√
The company paid shareholders a
$10,000 dividend
...
com
51
10,000
10,000
Accounting Cycle Exercises II
Jan
...
Jan
...
Jan
...
Jan
...
Jan
...
Jan
...
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Accounting Cycle Exercises II
Problem 7
Solution 7 (e)
HAGEN CORPORATION
Income Statement
For the Month Ending January 31, 20X6
Revenues
Services to customers
$ 104,000
Expenses
Salaries
$ 28,000
Supplies
8,000
Rent
6,800
Interest
2,400
Net income
45,200
$ 58,800
HAGEN CORPORATION
Statement of Retained Earnings
For the Month Ending January 31, 20X6
Beginning retained earnings
$ 440,000
Plus: Net income
58,800
$ 498,800
Less: Dividends
10,000
Ending retained earnings
$ 488,800
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Accounting Cycle Exercises II
Problem 8
Problem 8
Mont Blanc Corporation is a small business operating in a state where a tax on income is contrary to
the state’s constitution
...
The tax is
equal to 1% of revenues in excess of $300,000
...
Total deposits were $1,240,000, and the company paid taxes of $9,400 (($1,240,000 –
$300,000) × 1%)
...
You immediately find that the company does not maintain a typical journal/ledger system, and
is fundamentally clueless about proper accounting procedures
...
Fact 2
The total deposits included $75,000 of interest income on investments
...
The
The bank subsequently discovered the error, and removed the funds from
Moncrief ’s account
...
The company maintains a cash receipts book and you
have determined that $74,100 was collected from customers but never deposited
...
Fact 6 company deposits included $42,000 that was the result of a refund of an
The
overpayment of federal income taxes
...
This $30,000 advance was deposited and subsequently refunded when
both parties mutually agreed to cancel the contract
...
As
of the beginning of the year, the balance due from customers was $390,000
...
Mont Blanc
has never experienced a problem with non-payment, and all customers pay their
accounts in full within 90 days of a transaction
...
com
56
Accounting Cycle Exercises II
Problem 8
a) Prepare an analysis to determine the correct amount of revenue for purposes of computing
the tax
...
c) Prepare a general ledger account supporting the revenue calculation
...
RUN LONGER
...
GAITEYE
...
indd 1
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58
Accounting Cycle Exercises II
Problem 8
Worksheet 8 (c)
REVENUES
Date
Description
Debit
Balance forward
Credit
Balance
-
-
-
-
-
-
-
-
-
-
-
-
Solution 8 (a)
a) The following schedule reveals the corrected revenue calculations
...
Gross receipts as reported
$ 3,720,000
Fact 1: Remove stockholder investments
(450,000)
Fact 2: Remove interest income
(75,000)
Fact 3: Remove deposit error
(2,700)
Fact 4: Add cash revenues never deposited
74,100
Fact 5: Remove refund included in revenues
(3,600)
Fact 6: Remove tax refund deposit
(42,000)
Fact 7: Remove customer deposit refunded
(30,000)
Fact 8: Subtract collections of beginning receivables
(390,000)
Fact 8: Add services provided on account not yet collected
1,170,000
Corrected gross receipts
$ 3,970,800
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Accounting Cycle Exercises II
Fact 4
Problem 8
Cash
74,100
Revenues
74,100
Record service provided for cash
Fact 5
Cash
36,000
Supplies Expense
36,000
Reduce supplies for refund
Fact 6
Cash
42,000
Tax Expense
42,000
Reduce taxes for refund
Fact 7
No net adjustment needed
Fact 8
Cash
390,000
Accounts Receivable
390,000
Record collection of receivables
Fact 8
Accounts Receivable
1,170,000
Revenues
1,170,000
Services provided on account
Balance
Cash
2,726,700
Revenues
2,726,700
All other revenues ($3,970,800 - $74,100 $1,170,000 = $2,726,700)
Solution 8 (c)
REVENUES
Date
Description
Debit
Credit
Balance
Balance forward
-
-
-
Fact 4
-
74,100
74,100
Fact 8
-
1,170,000
1,244,100
Balance
-
2,726,700
3,970,800
61
Title: Accountin Cycle Excersise ii
Description: This exercise book is the second of four exercise books that correspond directly with the Accounting Cycle textbook. The exercises relate specifically to Part 2 of the Accounting Cycle textbook and focus on information processing. The exercises cover accounts, debits, credits, assets, expenses, dividends, liabilities, revenues, and equity. The exercises also cover basic accounting activities such as journalizing transactions, posting to the general ledger, preparing a trial balance, and understanding account balances.
Description: This exercise book is the second of four exercise books that correspond directly with the Accounting Cycle textbook. The exercises relate specifically to Part 2 of the Accounting Cycle textbook and focus on information processing. The exercises cover accounts, debits, credits, assets, expenses, dividends, liabilities, revenues, and equity. The exercises also cover basic accounting activities such as journalizing transactions, posting to the general ledger, preparing a trial balance, and understanding account balances.