Problem #1 ( 15 Points )

Problem #1 ( 15 points )

Dolly Barton began Barton Office Services in October and during that month completed these transactions:
a. Invested $10,000 cash, and $15,000 of computer equipment.
b. Paid $500 cash for an insurance premium covering the next 12 months.
c. Completed a word processing assignment for a customer and collected $1,000 cash.
d. Paid $200 cash for office supplies.
e. Paid $2,000 for October's rent.
Prepare journal entries to record the above transactions. Explanations are unnecessary.
GENERAL JOURNAL
Page ______
Date / Account Titles & Explanations / Debit / Credit
a. / Cash / 10,000
Computer Equipment / 15,000
Dolly Barton, Capital / 25,000
b. / Prepaid Insurance / 500
Cash / 500
c. / Cash / 1,000
Service Revenue / 1,000
d. / Office Supplies / 200
Cash / 200
e. / Rent Expense / 2,000
Cash / 2,000

Problem #2 ( 15 points )

The adjusted trial balance of Sara's Web Services follows:

(a) Prepare the closing entries for Sara's Web Services.
(b) What is the balance of Sara's capital account after the closing entries are posted?
GENERAL JOURNAL
Page ______
Date / Account Titles & Explanations / Debit / Credit
Dec 31 / Service Revenue / 21,720
Income Summary / 21,720
To close revenue accounts
Income Summary / 12,270
Salaries Expense / 6,920
Depreciation Expense / 2,000
Rent Expense / 1,200
Supplies Expense / 800
Utilities Expense / 950
Insurance Expense / 400
To close expense accounts
Income Summary / 9,450
Sara Pollis, Capital / 9,450
To close Income Summary Account to Capital Account
Sara Pollis, Capital / 4,800
Sara Pollis, Withdrawals / 4,800
To close Withdrawals Account
Sara Polis, Capital Beginning / 13,925
Add: Net Income / 9,450
Total / 23,375
Less: Withdrawals / (4,800)
Sara Polis, Capital Ending / 18,575
Problem #3 ( 15 points )
A company uses a sales journal, purchases journal, cash receipts journal, cash disbursements journal, and general journal. A perpetual inventory system is used. The following transactions were completed by the company during the current month of October:

Record these transactions in the appropriate journal shown below.
Sales Journal
Invoice / Accounts Receivable Dr. / Cost of Goods Sold Dr.
Date / Account Debited / Number / PR / Sales Cr. / Inventory Cr.
Oct 3 / South Corp. / 1122 / 6,000 / 3,900

Cash Receipt Journal
Cost of
Goods Sold
Sales / Accounts / Other / Dr
Account / Cash / Discount / Receivable / Sales / Accounts / Inventory
Date / Credited / Explanation / PR / Dr. / Dr. / Cr. / Cr. / Cr. / Cr
Oct 6 / Land / Sold Land / 30,000 / 30,000
Cash Disbursement Journal
Other / Accounts
Cash / Inventory / Accounts / Payable
Date / Ck. No. / Payee / Account Debited / PR / Cr. / Cr. / Dr. / Dr.
Oct 11 / 2795 / Office Helpers / Office Supplies / 420 / 420
Oct 24 / 2796 / Management Inc. / Rent Expense / 5,400 / 5,400
GENERAL JOURNAL
Page ______
Date / Account Titles & Explanations / Debit / Credit
Oct 15 / Sales Returns and Allowances / 550
Accounts Receivable-West Corp / 550
Merchandise Inventory / 369
Cost of Goods Sold / 369
To record returned merchandise by West Corp.
21 / Accounts Payable-Min Corp. / 330
Merchandise Inventory / 330
To record returned merchandise To Min Corp.
31 / Depreciation Expense / 12,000
Accumulated Depreciation-Equipment / 12,000

Problem #4 ( 15 points )

On April 1, 2004, SAS Corp. purchased and placed in service a plant asset. The following information is available regarding the plant asset:

Make the necessary adjusting journal entries at December 31, 2004, and December 31, 2005 to record depreciation for each year under the following depreciation methods:
a. Straight-line.
b. Double-declining-balance.
GENERAL JOURNAL
Page ______
Date / Account Titles & Explanations / Debit / Credit
a. / Straight Line
2004
Dec 31 / Depreciation Expense / 17,250
Accumulated Depreciation / 17,250
2005
Dec 31 / Depreciation Expense / 23,000
Accumulated Depreciation / 23,000
b. / Double Declining Balance
2004
Dec 31 / Depreciation Expense / 39,000
Accumulated Depreciation / 39,000
2005
Dec 31 / Depreciation Expense / 36,400
Accumulated Depreciation / 36,400

Problem #5 ( 20 points )

On December 1, 2004 Gates Company borrowed $45,000 cash from FirstBank on a 90-day, 9% note payable.
a. Prepare Gate's general journal entry to record the issuance of the note payable.
b. Prepare Gate's general journal entry to record the accrued interest due at December 31, 2004.
c. Prepare Gate's general journal entry to record the payment of the note on March 1, 2005.
GENERAL JOURNAL
Page ______
Date / Account Titles & Explanations / Debit / Credit
2004
Dec 1 / Cash / 45,000
Note Payable / 45,000
To record the issuance of note payable
31 / Interest Expense / 337.50
Interest Payable / 337.50
To record accrual of interest
2005
Mar 1 / Notes Payable / 45,000
Interest Payable / 337.5
Interest Expense / 675
Cash / 46,012.50
To record payment of the note payable and interests

Page 5