During February 2015, Claude Sample who operates a sports clinic presented the following for the first month of his company’s operation: Feb 1. Sample invested $55,000 in the business by depositing it into the company’s bank account. Feb 2. Paid $46,000 cash for land. Feb 3. Purchased medical supplies for $1,800 on account. Feb 4. Officially opened for business. Feb 5. During the month, Sample treated patients and earned service revenue of $8,000, receiving cash. Feb 6. Paid cash expenses: employees’ salaries, $1,600; office rent, $900; utilities, $100. Feb 7. Returned supplies purchased on the 3rd for the cost of those supplies, $700. Feb 8. Paid $1,100 on account for purchases made on Feb 3. 1. An invoice for consultancy service provided to Running Track Club for $25,000 was left in a desk drawer unnoticed and had been omitted completely from the books. The records showed that a cash receipt for $15,000 was issued relating to this transaction while the balance was on account. The company records its consultancy fees in service revenue account. 2. Purchase of medical supplies on February 3 was for $18,000 and not $1,800 as previously incorrectly reported. 3. On Feb 1 the $55,000 invested by Sample ought to have been allocated $45,000 bank account and $10,000 office equipment based on confirmation from the owner that the previous info provided was incorrectly stated. 4. Drawings of $1,000 were not recorded. 5. An electricity bill for $5,000 paid by cash was placed in a desk drawer and not presented with the first set of transactions. The company records its electricity charges in the utility expense account. Required: i. Record the journal entries necessary to correct each of the errors mentioned above. Narrations are not required.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

100%

During February 2015, Claude Sample who operates a sports clinic presented the following for the first month of his company’s operation: Feb 1. Sample invested $55,000 in the business by depositing it into the company’s bank account. Feb 2. Paid $46,000 cash for land. Feb 3. Purchased medical supplies for $1,800 on account. Feb 4. Officially opened for business. Feb 5. During the month, Sample treated patients and earned service revenue of $8,000, receiving cash. Feb 6. Paid cash expenses: employees’ salaries, $1,600; office rent, $900; utilities, $100. Feb 7. Returned supplies purchased on the 3rd for the cost of those supplies, $700. Feb 8. Paid $1,100 on account for purchases made on Feb 3. 1. An invoice for consultancy service provided to Running Track Club for $25,000 was left in a desk drawer unnoticed and had been omitted completely from the books. The records showed that a cash receipt for $15,000 was issued relating to this transaction while the balance was on account. The company records its consultancy fees in service revenue account. 2. Purchase of medical supplies on February 3 was for $18,000 and not $1,800 as previously incorrectly reported. 3. On Feb 1 the $55,000 invested by Sample ought to have been allocated $45,000 bank account and $10,000 office equipment based on confirmation from the owner that the previous info provided was incorrectly stated. 4. Drawings of $1,000 were not recorded. 5. An electricity bill for $5,000 paid by cash was placed in a desk drawer and not presented with the first set of transactions. The company records its electricity charges in the utility expense account. Required: i. Record the journal entries necessary to correct each of the errors mentioned above. Narrations are not required.

AI-Generated Solution

AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.