P4A-33A (similar to)

On December 1, Tim Washington began an auto repair shop, Washington's Quality Automotive. The following transactions occurred during December:
.
Requirement 1. Prepare the journal entries, and post to the T-accounts.
Begin by preparing the journal entries for the
December
transactions. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Dec.
1:
Washington
contributed
$63,000
cash to the business in exchange for shares of common stock.
Date Accounts and Explanation Debit Credit
Dec. 1 Cash 63,000
Common Stock 63,000

Issued common stock.

Dec.
1: Purchased
$13,800
of equipment paying cash.
Date Accounts and Explanation Debit Credit
Dec. 1 Equipment 13,800
Cash 13,800

Purchased equipment with cash.

Dec.
1: Paid
$2,250
for a
5-month
insurance policy starting on
December
1.
Date Accounts and Explanation Debit Credit
Dec. 1 Prepaid Insurance 2,250
Cash 2,250

Paid insurance in advance.

Dec.
9: Paid
$30,000
cash to purchase land to be used in operations.
Date Accounts and Explanation Debit Credit
Dec. 9 Land 30,000
Cash 30,000
 Purchased land with cash.
Dec.
10: Purchased office supplies on account,
$1,700.
Date Accounts and Explanation Debit Credit
Dec. 10 Office Supplies 1,700
Accounts Payable 1,700

Purchased office supplies on account.

Dec.
19: Borrowed
$28,000
from the bank for business use.
Washington
signed a note payable to the bank in the name of the corporation. The note is due in five years.
Date Accounts and Explanation Debit Credit
Dec. 19 Cash 28,000
Notes Payable 28,000

Borrowed cash on notes payable.

Dec.
22: Paid
$2,200
for advertising expenses.
Date Accounts and Explanation Debit Credit
Dec. 22 Advertising Expense 2,200
Cash 2,200

Paid cash expense.

Dec.
26: Paid
$1,200
on account.
Date Accounts and Explanation Debit Credit
Dec. 26 Accounts Payable 1,200
Cash 1,200

Paid cash on account.

Dec.
28: The business received a bill for utilities to be paid in
January,
$260.
 Date Accounts and Explanation Debit Credit
Dec. 28 Utilities Expense 260
Utilities Payable 260

Accrued utility liability.

Dec.
31:
Revenues earned during the month included
$20,000
cash and
$2,900
on account. (Prepare a single compound entry for this transaction.)
Date Accounts and Explanation Debit Credit
Dec. 31 Cash 20,000
Accounts Receivable 2,900
Service Revenue 22,900

Service revenue earned in cash and on account.

Dec.
31:
Paid employees' salaries
$3,300
and building rent
$1,900.
Record as a compound entry.
Date Accounts and Explanation Debit Credit
Dec. 31 Salaries Expense 3,300
Rent Expense 1,900
Cash 5,200

Paid cash expenses.

Dec.
31:
The business received
$1,090
for auto screening services to be performed next month.
Date Accounts and Explanation Debit Credit
Dec. 31 Cash 1,090
Unearned Revenue 1,090

Collected cash for future services.

Dec.
31:
Paid cash dividends of
$4,000
to stockholders.
Date Accounts and Explanation Debit Credit
Dec. 31 Dividends 4,000
Cash 4,000

Paid dividends.
Post the transactions to the T-accounts. Use the transaction dates as posting references. If posting more than one entry on the same date to a single account, post to that account in the same order as you prepared the entries above. Use a "Bal." posting
reference to show the ending balance of each account. For any accounts with a zero balance, select the "Bal." posting reference and enter a "0" on the normal side of the account.
Review the journal entries you prepared above.
LOADING...
Cash Accounts Payable Service Revenue
Dec. 1 63,000 13,800 Dec. 1 Dec. 26 1,200 1,700 Dec. 10 22,900 Dec. 31
Dec. 19 28,000 2,250 Dec. 1
Dec. 31 20,000 30,000 Dec. 9 500 Bal. 22,900 Bal.
Dec. 31 1,090 2,200 Dec. 22
1,200 Dec. 26 Utilities Payable Salaries Expense
5,200 Dec. 31 260 Dec. 28 Dec. 31 3,300
4,000 Dec. 31
Bal. 53,440 260 Bal. Bal. 3,300

Accounts Receivable Interest Payable Rent Expense

Dec. 31 2,900 Dec. 31 1,900

Bal. 2,900 0 Bal. Bal. 1,900

Office Supplies Unearned Revenue Utilities Expense

Dec. 10 1,700 1,090 Dec. 31 Dec. 28 260

Bal. 1,700 1,090 Bal. Bal. 260

Prepaid Insurance Notes Payable Advertising Expense

Dec. 1 2,250 28,000 Dec. 19 Dec. 22 2,200

Bal. 2,250 28,000 Bal. Bal. 2,200

Land Common Stock Supplies Expense

Dec. 9 30,000 63,000 Dec. 1

Bal. 30,000 63,000 Bal. Bal. 0

Equipment Dividends Insurance Expense

Dec. 1 13,800 Dec. 31 4,000

Bal. 13,800 Bal. 4,000 Bal. 0

Accumulated Depr.—Equipment Interest Expense

0 Bal. Bal. 0

Depreciation Expense—
Equipment

Bal. 0
Requirement 2. Prepare an unadjusted trial balance. (Exclude any accounts with a zero balance from the trial balance.)
Review the T-accounts you prepared in Requirement 1.
LOADING...
Washington's Quality Automotive
Unadjusted Trial Balance
December 31, 2018
Balance
Account Title Debit Credit
Cash $53,440
Accounts Receivable 2,900
Office Supplies 1,700
Prepaid Insurance 2,250
Land 30,000
Equipment 13,800
Accounts Payable $500
Utilities Payable 260
Unearned Revenue 1,090
Notes Payable 28,000
Common Stock 63,000
Dividends 4,000
Service Revenue 22,900
Salaries Expense 3,300
Advertising Expense 2,200
Rent Expense 1,900
Utilities Expense 260
Total $115,750 $115,750
Requirement 3. Prepare the adjusting entries, and post to the T-accounts.
Begin by preparing the adjusting entries. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
a. Office Supplies used during the month,
$1,600.
Date Accounts and Explanation Debit Credit
Dec. 31 Supplies Expense 1,600
Adj. (a) Office Supplies 1,600
 To record office supplies used.
b. Depreciation for the month,
$230.
Date Accounts and Explanation Debit Credit
Dec. 31 Depreciation Expense—Equipment 230
Adj. (b) Accumulated Depreciation—Equipment 230

To record depreciation on equipment.

c. One month insurance has expired. (On
December
1, the business paid
$2,250
for a
5-month
insurance policy starting on
December
1.)
Date Accounts and Explanation Debit Credit
Dec. 31 Insurance Expense 450
Adj. (c) Prepaid Insurance 450

To record insurance expense.

d. Accrued Interest Expense,
$100.
Date Accounts and Explanation Debit Credit
Dec. 31 Interest Expense 100
Adj. (d) Interest Payable 100

To accrue interest expense.

Post the adjusting entries to the T-accounts. The unadjusted balances of the accounts ("Bal.") have been entered for you. Use the adjustment and corresponding letters as posting
references—"Adj.
(a)", "Adj. (b)", etc. Use a "Bal." posting reference on the last line of each T-account to show the adjusted balance of each account.
Review the adjusting journal entries you prepared above.
LOADING...
Cash Accounts Payable Service Revenue
Bal. 53,440 500 Bal. 22,900 Bal.

Bal. 53,440 500 Bal. 22,900 Bal.

Utilities Payable Salaries Expense

260 Bal. Bal. 3,300
 260 Bal. Bal. 3,300

Accounts Receivable Interest Payable Rent Expense

Bal. 2,900 100 Adj. (d) Bal. 1,900

Bal. 2,900 100 Bal. Bal. 1,900

Office Supplies Unearned Revenue Utilities Expense

Bal. 1,700 1,600 Adj. (a) 1,090 Bal. Bal. 260

Bal. 100 1,090 Bal. Bal. 260

Prepaid Insurance Notes Payable Advertising Expense

Bal. 2,250 450 Adj. (c) 28,000 Bal. Bal. 2,200

Bal. 1,800 28,000 Bal. Bal. 2,200

Land Common Stock Supplies Expense

Bal. 30,000 63,000 Bal. Adj. (a) 1,600

Bal. 30,000 63,000 Bal. Bal. 1,600

Equipment Dividends Insurance Expense

Bal. 13,800 Bal. 4,000 Adj. (c) 450

Bal. 13,800 Bal. 4,000 Bal. 450

Accumulated Depr.—Equipment Interest Expense

230 Adj. (b) Adj. (d) 100

230 Bal. Bal. 100

Depreciation Expense—
Equipment
Adj. (b) 230

Bal. 230
Requirement 4. Prepare an adjusted trial balance.
Review the T-accounts you prepared in Requirement 3.
LOADING...
Washington's Quality Automotive
Adjusted Trial Balance
December 31, 2018
 Balance
Account Title Debit Credit
Cash $53,440
Accounts Receivable 2,900
Office Supplies 100
Prepaid Insurance 1,800
Land 30,000
Equipment 13,800
Accumulated Depreciation—Equipment $230
Accounts Payable 500
Utilities Payable 260
Interest Payable 100
Unearned Revenue 1,090
Depreciation Expense—Equipment 230
Insurance Expense 450
Notes Payable 28,000
Common Stock 63,000
Dividends 4,000
Service Revenue 22,900
Salaries Expense 3,300
Rent Expense 1,900
Utilities Expense 260
Advertising Expense 2,200
Supplies Expense 1,600
Interest Expense 100
Total $116,080 $116,080
Requirement 5. Complete the worksheet for the month ended
December
31,
2018.
The adjusted trial balance columns of the worksheet have been completed for you using the adjusted trial balance you prepared above. Complete the partial worksheet by populating the Income Statement and Balance Sheet columns.
Washington's Quality Automotive
Worksheet (Partial)
December 31, 2018
Adjusted Income Balance
Trial Balance Statement Sheet
Account Title Debit Credit Debit Credit Debit Credit
Cash $53,440 $53,440
Accounts Receivable 2,900 2,900
Office Supplies 100 100
Prepaid Insurance 1,800 1,800
Land 30,000 30,000
Equipment 13,800 13,800
 Accumulated Depr.—
Equip. $230 $230
Accounts Payable 500 500
Utilities Payable 260 260
Interest Payable 100 100
Unearned Revenue 1,090 1,090
Notes Payable 28,000 28,000
Common Stock 63,000 63,000
Dividends 4,000 4,000
Service Revenue 22,900 $22,900
Salaries Expense 3,300 $3,300
Rent Expense 1,900 1,900
Utilities Expense 260 260
Advertising Expense 2,200 2,200
Supplies Expense 1,600 1,600
Insurance Expense 450 450
Interest Expense 100 100
Depr. Expense—Equip. 230 230
$116,080 $116,080 $10,040 $22,900 $106,040 $93,180
Net income or loss 12,860 12,860
$22,900 $22,900 $106,040 $106,040
Requirement 6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form.
Begin by preparing the income statement. (If a box is not used in the statement, leave the box empty; do not select a label or enter a zero.)
Review the Income Statement columns of the worksheet completed in Requirement 5.
LOADING...
Washington's Quality Automotive
Income Statement
Month Ended December 31, 2018
Revenues:
Service Revenue $22,900
Expenses:
Advertising Expense $2,200
Depreciation Expense—Equipment 230
Insurance Expense 450
Interest Expense 100
Rent Expense 1,900
Salaries Expense 3,300
Supplies Expense 1,600
Utilities Expense 260

Total Expenses 10,040

Net Income (Loss) $12,860
Prepare the statement of retained earnings. Enter any increases in retained earnings before the subtotal and any decreases to retained earnings below the subtotal. (Complete all answer boxes. Enter a "0" for any zero balances.)
Review the Balance Sheet columns of the worksheet completed in Requirement 5.
LOADING...
Washington's Quality Automotive
Statement of Retained Earnings
Month Ended December 31, 2018
Retained Earnings, December 1, 2018 $0
Net income for the month 12,860
$12,860
Dividends (4,000)
Retained Earnings, December 31, 2018 $8,860
Prepare the classified balance sheet in report form as of
December
31,
2018.
Begin by preparing the asset section of the balance sheet and then prepare the liabilities and stockholders' equity sections.
Review the Balance Sheet columns of the worksheet completed in Requirement 5.
LOADING...
Washington's Quality Automotive
Balance Sheet
December 31, 2018
Assets
Current Assets:
Cash $53,440
Accounts Receivable 2,900
Office Supplies 100
Prepaid Insurance 1,800
Total Current Assets $58,240
Property, Plant, and Equipment:
Land $30,000
Equipment 13,800
Less: Acc. Depr.—Equipment (230) 13,570
Total Property, Plant, and Equipment 43,570
Total Assets $101,810
Liabilities
Current Liabilities:
Accounts Payable $500
Interest Payable 100
Utilities Payable 260
Unearned Revenue 1,090
Total Current Liabilities 1,950
Long-term Liabilities:
Notes Payable 28,000
Total Liabilities 29,950
Stockholders' Equity
Common Stock 63,000
Retained Earnings 8,860
Total Stockholders' Equity 71,860
Total Liabilities and Stockholders' Equity $101,810
Requirement 7. Prepare the closing entries, and post to the T-accounts.
Begin by preparing the closing entries. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Start by closing revenues.
Review the Income Statement columns of the worksheet completed in Requirement 5.
LOADING...
Date Accounts and Explanation Debit Credit
Dec. 31 Service Revenue 22,900
Clos. (1) Income Summary 22,900

To close revenue.
Close expenses for the period.
Review the Income Statement columns of the worksheet completed in Requirement 5.
LOADING...
Date Accounts and Explanation Debit Credit
Dec. 31 Income Summary 10,040
Clos. (2) Advertising Expense 2,200
Depreciation Expense—Equipment 230
Insurance Expense 450
Interest Expense 100
Rent Expense 1,900
Utilities Expense 260
Salaries Expense 3,300
Supplies Expense 1,600
To close expenses.
Close Income Summary.
Review the Income Statement columns of the worksheet completed in Requirement 5.
LOADING...
Date Accounts and Explanation Debit Credit
Dec. 31 Income Summary 12,860
Clos. (3) Retained Earnings 12,860

To close Income Summary.

Close dividends.
Review the Balance Sheet columns of the worksheet completed in Requirement 5.
LOADING...
Date Accounts and Explanation Debit Credit
Dec. 31 Retained Earnings 4,000
Clos. (4) Dividends 4,000
 To close Dividends.
Post the closing entries to the T-accounts. Use "Clos." and the corresponding number as shown in the journal entry as posting
references—"Clos.(1)",
"Clos.(2)", etc. The adjusted balance of each account has been entered for you. Post any closing entries to the accounts and then calculate the post-closing balance ("Bal.") of each account (including those that were not closed). For any accounts with a zero
balance after closing, enter a "0" on the normal side of the account. For Income Summary, calculate and enter the balance ("Bal.") before posting the entry to close out the account. Post the entry to close Income Summary account on the same line as you
entered the balance prior to closing (the second line) and then show the post-closing balance ("Bal.") on the last (third) line of the account.
Review the closing journal entries you prepared above.
LOADING...
Cash Accounts Payable Service Revenue
Bal. 53,440 500 Bal. Clos.(1) 22,900 22,900 Dec. 31.
Bal. 53,440 500 Bal. 0 Bal.

Utilities Payable Salaries Expense

260 Bal. Bal. 3,300 3,300 Clos.(2)
260 Bal. Bal. 0

Accounts Receivable Interest Payable Rent Expense

Bal. 2,900 100 Bal. Bal. 1,900 1,900 Clos.(2)
Bal. 2,900 100 Bal. Bal. 0

Office Supplies Unearned Revenue Utilities Expense

Bal. 100 1,090 Bal. Bal. 260 260 Clos.(2)
Bal. 100 1,090 Bal. Bal. 0

Prepaid Insurance Notes Payable Advertising Expense

Bal. 1,800 28,000 Bal. Bal. 2,200 2,200 Clos.(2)
Bal. 1,800 28,000 Bal. Bal. 0

Land Common Stock Supplies Expense

Bal. 30,000 63,000 Bal. Bal. 1,600 1,600 Clos.(2)
Bal. 30,000 63,000 Bal. Bal. 0

Equipment Dividends Insurance Expense

Bal. 13,800 Bal. 4,000 4,000 Clos.(4) Bal. 450 450 Clos.(2)
Bal. 13,800 Bal. 0 Bal. 0

Accumulated Depr.—Equipment Income Summary Interest Expense

230 Bal. Clos.(2) 10,040 22,900 Clos.(1) Bal. 100 100 Clos.(2)
230 Bal. Clos.(3) 12,860 12,860 Bal. Bal. 0
0 Bal.

Depreciation Expense—
Retained Earnings Equipment
 Clos.(4) 4,000 12,860 Clos.(3) Bal. 230 230 Clos.(2)
8,860 Bal. Bal. 0
Requirement 8. Prepare a post-closing trial balance.
Review the T-accounts you prepared in Requirement 7.
LOADING...
Washington's Quality Automotive
Post-Closing Trial Balance
December 31, 2018
Balance
Account Title Debit Credit
Cash $53,440
Accounts Receivable 2,900
Equipment 13,800
Land 30,000
Prepaid Insurance 1,800
Office Supplies 100
Accounts Payable $500
Interest Payable 100
Notes Payable 28,000
Utilities Payable 260
Unearned Revenue 1,090
Common Stock 63,000
Accumulated Depreciation—Equipment 230
Retained Earnings 8,860
Total $102,040 $102,040
This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers.

Similar Question
All parts showing