Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2, Problem 3P
Jennifer Lopez opened a school for administrative skills called Lopez Office Training and completed the following transactions:
- a. Contributed the following assets to the business:
Cash $5,700
Computers 4,300
Office Equipment 3,600
- b. Found a location for her business and paid the first month’s rent, $260.
- c. Paid for an advertisement announcing the opening of the school, $190.
- d. Received applications from three students for a four-week secretarial program and two students for a ten-day keyboarding course. The students will be billed a total of $1,300.
- e. Purchased supplies on credit, $330.
- f. Billed the enrolled students, $1,740.
- g. Purchased a second-hand computer, $480, and office equipment, $380, on credit.
- h. Paid for the supplies purchased on credit in e, $330.
- i. Paid cash to repair a broken computer, $40.
- j. Received partial payment from students previously billed, $1,080.
- k. Paid the utility bill for the current month, $90.
- l. Paid an assistant one week’s salary, $440.
- m. Made a cash withdrawal of $300.
Required
- 1. Set up the following T accounts: Cash;
Accounts Receivable ; Supplies; Computers; Office Equipment; Accounts Payable; J. Lopez, Capital; J. Lopez, Withdrawals; Tuition Revenue; Salaries Expense; Utilities Expense; Rent Expense; Repair Expense; and Advertising Expense. - 2. Record the transactions directly in the T accounts, using the transaction letter to identify each debit and credit.
- 3. Prepare a
trial balance using today’s date. - 4. Business Application ▶ Examine transactions f and j. What were the revenues, and how much cash was received from the revenues? What business issues might you see arising from the differences in these numbers?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees:
Year 1 Assets
Purchase Date
Basis
Computers (5-year)
October 30, Year 1
$ 15,100
Office equipment (7-year)
October 30, Year 1
10,000
Furniture (7-year)
October 30, Year 1
3,200
Start-up costs
October 30, Year 1
17,180
In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $10,180, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not…
Erica trades as a financial adviser. She rents an office in the town centre and employs
three full-time staff. She advises clients on how to manage their savings, investments
and pension funds. Erica decided that she needed a new computer system for the
business in order to improve efficiency. The following expenditure was incurred when
the new system was purchased:
Cost of computer $1900
Paper, ink cartridges and other consumables $110
Cost of colour laser printer $450
Installation and testing costs $200
Staff training on new system $500
Annual insurance against theft and breakdowns $90
Cost of rewiring to accommodate new computer $340
Annual maintenance agreement $99
REQUIRED:
Calculate the total of capital expenditure incurred by Erica’s business when
acquiring the computer system.
To what extent would the business’s profits have been reduced by the
expenditure listed.
If Erica had borrowed $3000 to pay for the new computer system, how would
the interest payments on the…
Alice Trading runs 10 branches and pays for a variety of expenses. Zabrina, the Accounts Payable Clerk of Alice Trading writes the checks for each supplier and the Accounting Manager signs the checks. Zabrina decided she needs a raise and the Manager told her to wait for six months. Zabrina devised a plan to get a raise on her own. She created a new supplier account for her friend’s business, Prime Auto Parts. Zabrina also created two purchase orders for Prime Auto Parts for ₱20,000 and ₱15,000 and wrote checks to pay these invoices. She knows the Manager will sign all checks only looking at the checks over ₱30,000. She delivers the checks to her friend who will encash the checks and give the money to Zabrina. Is this a good way for Zabrina to obtain a raise? Eventually, what will be the effect of her actions? How can Jiffy prevent this type of incident?
Chapter 2 Solutions
Principles of Accounting
Ch. 2 - A company incurs a cost for a part that is needed...Ch. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - How are assets and expenses related, and why are...Ch. 2 - Prob. 6DQCh. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Tell whether each of the following accounts is an...Ch. 2 - Prob. 2SE
Ch. 2 - Prob. 3SECh. 2 - Prob. 4SECh. 2 - Prob. 5SECh. 2 - Prob. 6SECh. 2 - Prob. 7SECh. 2 - Prepare a general journal form like the one in...Ch. 2 - Prepare three ledger account forms like the one in...Ch. 2 - Prob. 10SECh. 2 - Prob. 11SECh. 2 - Prob. 12SECh. 2 - Which of the following events would be recognized...Ch. 2 - You are given the following list of accounts with...Ch. 2 - The following ledger accounts are for Afocentric...Ch. 2 - Prob. 4EACh. 2 - The accounts that follow are applicable to Harolds...Ch. 2 - Prob. 6EACh. 2 - Prob. 7EACh. 2 - Prob. 8EACh. 2 - After recording the transactions in E6A, prepare a...Ch. 2 - The list that follows presents Shah Companys...Ch. 2 - Which of the following errors would cause a trial...Ch. 2 - Prob. 12EACh. 2 - Record the transactions in E6A in the general...Ch. 2 - Prob. 14EACh. 2 - Prob. 15EACh. 2 - Prob. 16EACh. 2 - Highland Design Company creates radio and...Ch. 2 - The following accounts are applicable to Georges...Ch. 2 - Jennifer Lopez opened a school for administrative...Ch. 2 - Sid Patel bid for and won a concession to rent...Ch. 2 - Nordtown Company is a marketing firm. The companys...Ch. 2 - Prob. 6APCh. 2 - The following accounts are applicable to Raymonds...Ch. 2 - Prob. 8APCh. 2 - David Roberts began an upholstery cleaning...Ch. 2 - Prob. 10APCh. 2 - Prob. 1CCh. 2 - Prob. 2CCh. 2 - Prob. 3CCh. 2 - Prob. 4CCh. 2 - Prob. 5CCh. 2 - Prob. 6CCh. 2 - Prob. 7C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Our client performs bookkeeping work for her clients. She performs most of her client work at the client's office. She has about ten clients and spends about 4 hours per client each week at the client's office. She also has a dedicated office at her home where she does all of her administrative work for her business. The administrative work she performs is at her home office to include billing, record keeping, and training. Area of her home used for business - 500 square feet 5,000 square feet Total area of home Annual indirect costs o Gross income from business $100,000 o Deductible mortgage interest $25,000 o Real estate taxes $1,500 o Utilities $2,500 Ignore depreciation for this assignment. Questions: 6. Does the IRS provide a publication on this topic? If so, please cite. Do not attach the publication as support for this memorandum.arrow_forwardWhile completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees: Purchase Date October 30, Year 1 October 30, Year 1 October 30, Year 1 October 30, Year 1 Basis $16,200 10,000 5,400 19,160 Year 1 Asseta Computers (5-year) office equipment (7-year) Furniture (7-year) Start-up costa In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow Information systems students preparing to graduate. The customer list cost $12,160, and the sale was completed on April 30. During their summer break, Dailin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not considered a luxury…arrow_forwardImagine you are the finance manager of Al Mohsin Company. The company management feels that the cash management of the company should be made more effective. The following information from the company’s records is available to you: Business Studies Department, University of Technology & Applied Sciences (UTAS) Ministry of Manpower, Outcomes for the Assignment: Graduate Attributes Covered: Student ID : Name: Section No:1 Month Sales February 40,000 March 55,000 April 60,000 May 74,000 June 90,000 Additional Information Purchase Wages 20,000 7,000 14,000 8,000 28,000 9,000 30,000 9,000 32,000 8,800 Miscellaneous expenses 1,000 3,000 2,000 2,000 3,500 1. Al Mohsin LLC expects to have RO 8,000 cash balance at the beginning of April. 2. Period of credit allowed by suppliers – 2 months 3. 40% of the total sale is for cash. Half of the credit sale is collected in the next month of sale and the remaining half in the following month after that. 4. Delay…arrow_forward
- After several months of planning, Joane Cardinal started a haircutting business called “The Cutlery”. The following business activities occurred during it’s first month (June 2020) : On June 1st, Joane deposited $16,500 cash into a bank account of the organization On June 1st, purchased on credit tables & chairs (for the business) at TheBay store. Value $7,000 Rent office : $500 per month; paid cash Provided services to customers (on credit). Value $6,000 Purchased supplies, cash ($4,000). Paid 40% of the debt to “The Bay” store Provided services to customers. Value $3,400. 20% of the customers paid cash, 80% on credit. At the end of the month, Joane withdrew $400 cash for her personal use. Required Prepare journal entries and T accounts Produce Trial balance and Financial statements (3 usual statements)arrow_forwardTami Tyler opened Tami's Creations, Incorporated, a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University. Tami's Creations, Incorporated Income Statement For the Quarter Ended March 31 $ 1,128,000 Sales (28,200 units) Variable expenses: Variable cost of goods sold Variable selling and administrative Contribution margin Fixed expenses: $ 431,460 172,020 603,480 524,520 Fixed manufacturing overhead Fixed selling and administrative 249,600 536,520 $ (12,000) 286,920 Net operating loss Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption…arrow_forward(essay) Jiffy Trading runs 10 branches and pays for a variety of expenses. Anna, the Accounts Payable Clerk of Jiffy Trading writes the checks for each supplier and the Accounting Manager signs the checks. Anna decided she needs a raise and the Manager told her to wait for six months. Anna devised a plan to get a raise on her own. She created a new supplier account for her friend's business, Prime Auto Parts. Anna also created two purchase orders for Prime Auto Parts for P20,000 and P15,000 and wrote checks to pay theses invoices. She knows the Manager will sign all checks only looking at the checks over P30.000. She delivers the checks to her friend who will encash the checks and give the money to Anna. Is this a good way for Anna to obtain a raise? Eventually, what will be the effect of her actions? How can Jiffy prevent this type of incident?arrow_forward
- Donato Menorca was a service advisor in a car dealership. He supervised a team of mechanics that keeps and restores the customers’ cars to good operating condition. Tired of being an employee, he decided to put up Express Repair Shop. During the month of January 2020, Menorca completed the following transactions: Started his business by transferring Php 90,000 of his personal money to the business bank account; Paid rent for the month, Php 12,000; Purchased several equipment for Php 40,000; made a down payment of Php 20,000 and arranged to pay the balance the following month; Bought supplies for cash amounting to Php 6,000; Performed services amounting to Php 70,000 of which Php 40,000 was received in cash; Paid the following cash expenses: wages, Php 20,000; utilities, Php 6,000. REQUIRED: Use the following accounts: Cash; Accounts Receivable; Supplies; Equipment; Accounts Payable; D. Menorca, Capital; Service Revenue; Wages Expense; Rent Expense; Utilities Expense Record the…arrow_forwardMary Tan is the controller for Duck Associates, a property management company in Portland, Oregon. Each year, Tan and payroll clerk Toby Stock meet with the external auditors about payroll accounting. This year, the auditors suggest that Tan consider outsourcing Duck Associates’ payroll accounting to a company specializing in payroll processing services. This would allow Tan and her staff to focus on their primary responsibility: accounting for the properties under management. At present, payroll requires 1.5 employee positions: payroll clerk Toby Stock and a bookkeeper who spends half her time entering payroll data in the system. Tan considers this suggestion, and she lists the following items relating to outsourcing payroll accounting: a. The current payroll software that was purchased for $4,000 three years ago would not be needed if payroll processing were outsourced. b. Duck Associates’ bookkeeper would spend half her time preparing the weekly payroll input form that is…arrow_forwardBefore you begin this assignment, review the Tying It All Together feature in the chapter. Part of Fry’s Electronics, Inc.'s experience involves providing technical support to its customers. This includes in-home installations of electronics and also computer support at their retail store locations. Requirements Suppose Fry’s Electronics, Inc. provides $10,500 of computer support at the Dallas-Fort Worth store during the month of November. How would Fry's Electronics record this transaction? Assume all customers paid in cash. What financial statement(s) would this transaction affect? Assume Fry’s Electronics, Inc.’s Modesto, California, location received $24,000 for an annual contract to provide computer support to the local city government. How would Fry’s Electronics record this transaction? What financial statement(s) would this transaction affect? What is the difference in how revenue is recorded in requirements 1 and 2? Clearly state when revenue is recorded in each requirement.arrow_forward
- Doug Allen has decided to go into the insect extermination business and to operate as Doug's Extermination Service. The following transactions were completed during the first month of operations, May, 20--. 1. Doug invested $35,000 cash in the business. 2. Purchased extermination equipment for $17,000 in cash. 3. Paid $700 rent for garage and office quarters. 4. Purchased chemicals (expense) for $1,100 from Low Glow Chem Co. on account. 5. Received $1,600 revenue for extermination service. 6. Paid telephone bill, $120 7. Paid assistant's salary, $700. 8. Earned $980 revenue for extermination service, on account. 9. Paid electric bill, $230. 10. Paid for truck repairs (expense), $145. 11. Paid $600 to Low Glow Chem Co., on account. 12. Paid $131 for gas and oil for truck (expense). 13. Received $1,400 revenue for extermination service. 14. Received $500 for services previously earned on account in transaction (8). 15. Paid assistant's salary, $900.…arrow_forwardMary Tan is the controller for Duck Associates, a property management company in Portland, Oregon. Each year, Tan and payroll clerk Toby Stock meet with the external auditors about payroll accounting. This year, the auditors suggest that Tan consider outsourcing Duck Associates' payroll accounting to a company specializing in payroll processing services. This would allow Tan and her staff to focus on their primary responsibility: accounting for the properties under management. At present, payroll requires 1.5 employee positions—payroll clerk Toby Stock and a bookkeeper who spends half her time entering payroll data in the system. Tan considers this suggestion, and she lists the following items relating to outsourcing payroll accounting: The current payroll software that was purchased for $4,000 three years ago would not be needed if payroll processing were outsourced. Duck Associates' bookkeeper would spend half her time preparing the weekly payroll input form that is given to the…arrow_forwardAfter numerous campus interviews, Alex Sanchi, a student at BC, received two office interview invitations from the Orlando offices of two large firms. Both firms offered to cover her "out-of-pocket expenses" (travel, hotel, and meals). She scheduled the interviews for both firms on the same day, one in the morning and one in the afternoon. At the conclusion of each interview, she submitted to both firms her total out-of-pocket expenses of $296 for mileage, hotel, meals, parking and tolls. She believes this approach is appropriate. If she had made two trips, her cost would have been two times $296. She is also certain that neither firm knew she had visited the other on that same trip. Within ten days Alex received two checks in the mail, each in the amount of $296. Did Alex handle the situation properly? If not what should she have done?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY