Financial Accounting Fundamentals
Financial Accounting Fundamentals
6th Edition
ISBN: 9781259726910
Author: John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 4, Problem 4SP
To determine

Prepare journal entries to record the transactions from January to March.

Expert Solution
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Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Prepare journal entries to record the transactions from January to March.

DateAccount title and explanationPRAmount
DebitCredit
2018
4-JanWages Expense623$125
Wages Payable210$500
Cash101$625
(To record the Paid employee)
5-JanCash101$25,000
Common Stock307$25,000
(To record the Additional investment by owner for stock.)
7-JanMerchandise Inventory119$5,800
Accounts Payable - Corporation K201$5,800
(To record the Purchase of merchandise on credit)
9-JanCash101$2,668
Accounts Receivable— Company G106.6$2,668
(To record the Collected accounts receivable)$5,500
11-JanAccounts Receivable—Company AE106.1$5,500
Unearned Computer Services Revenue236$1,500
Computer Services Revenue403$7,000
( To record the Completed work on project)
13-JanAccounts Receivable—Corporation L106.5$5,200
Sales413$5,200
(To record the merchandise sold on credit.)
13-JanCost of Goods Sold502$3,560
Merchandise Inventory119$3,560
( To Record the cost of January 13 sale)
15-JanMerchandise Inventory119$600
Cash101$600
( To record the freight paid on incoming merchandise)
16-JanCash101$4,000
Computer Services Revenue403$4,000
(To record the cash collected revenue from customer)
Jan. 17Accounts Payable - Corporation K201$5,800
Merchandise Inventory119$58
Cash101$5,742
(To record the payment of  account payable within discount period)
20-JanSales Returns and Allowances414$500
Accounts Receivable—Corporation L106.5$500
( To record the defective goods returned from customers)
22-JanCash101$4,653
Sales Discounts415$47
Accounts Receivable—Corporation L106.5$4,700
(To record the Collections from accounts receivable)
24-JanAccounts Payable201$496
Merchandise Inventory119$496
(To record the return of merchandise for credit)
26-JanMerchandise Inventory119$9,000
Accounts Payable - Corporation K201$9,000
( To record the purchase of merchandise for resale)
26-JanAccounts Receivable—Incorporation KC106.8$5,800
Sales413$5,800
(To record the merchandise sold on credit)
26-JanCost of Goods Sold502$4,640
Merchandise Inventory119$4,640
( To record the  cost of January 26 sales)
31-JanWages Expense623$1,250
Cash101$1,250
( To record the payment of employee wages)
1-FebPrepaid Rent131$2,475
Cash101$2,475
( To record the payment of three months’ rent in advance)
3-FebAccounts Payable201$8,504
Merchandise Inventory119$90
Cash101$8,414
(To record the payment of  account payable within discount period)
5-FebAdvertising Expense655$600
Cash101$600
( To record the payment for advertising expense)
11-FebCash101$5,500
Accounts Receivable—Alex’s Eng. Co.106.1$5,500
( To record the collection of cash from customers)
15-FebDividends319$4,800
Cash101$4,800
(To record the payment of dividends)
23-FebAccounts Receivable—Corporation D106.7$3,220
Sales413$3,220
( To record the sale of merchandise on credit)
23-FebCost of Goods Sold502$2,660
Merchandise Inventory119$2,660
( To record the  cost of February 23 sales)
26-FebWages Expense623$1,000
Cash101$1,000
( To record the payment of wages to employee)
27-FebMileage Expense676$192
Cash101$192
(To record the Reimbursement of business mileage)
8-MarComputer Supplies126$2,730
Accounts Payable-Company H201$2,730
( To record the purchase of  supplies on credit)
9-MarCash101$3,220
Accounts Receivable—Corporation D106.7$3,220
( To record the collection of accounts receivable)
11-MarRepairs Expense–Computer684$960
Cash101$960
(To record the payment for computer repairs)
16-MarCash101$5,260
Computer Services Revenue403$5,260
( To record the collection cash revenue from customer)
19-MarAccounts Payable201$3,830
Cash101$3,830
( To record the payment of accounts payable ($1,100 + $2,730))
24-MarAccounts Receivable—Company EL106.3$9,047
Computer Services Revenue403$9,047
(To record the billed customer for services)
25-MarAccounts Receivable—Company WS106.2$2,800
Sales413$2,800
( To record the sale of merchandise on credit)
25-MarCost of Goods Sold502$2,002
Merchandise Inventory119$2,002
( To record the  cost of sales of March 25 )
30-MarAccounts Receivable—Company IFM106.4$2,220
Sales413$2,220
( To record the sale of merchandise on credit)
30-MarCost of Goods Sold502$1,048
Merchandise Inventory119$1,048
( To record the  cost of sales of March 30 )
31-MarMileage Expense676$128
Cash101$128
(To record the Reimbursement of business mileage)

Table (1)

2.

To determine

Post the journal entries to the accounts in the general ledger of Company BS.

2.

Expert Solution
Check Mark

Explanation of Solution

Account: A record, that documents or records the change in assets, liabilities, or equity for a particular period, is referred to as an account.

Cash No. 101
DatePRDebitCreditBalance
31-Dec$48,372
4-Jan$625$47,747
5-Jan$25,000$72,747
9-Jan$2,668$75,415
15-Jan$600$74,815
16-Jan$4,000$78,815
17-Jan$5,742$73,073
22-Jan$4,653$77,726
31-Jan$1,250$76,476
1-Feb$2,475$74,001
3-Feb$8,414$65,587
5-Feb$600$64,987
11-Jan$5,500$70,487
15-Feb$4,800$65,687
26-Feb$1,000$64,687
27-Feb$192$64,495
9-Mar$3,220$67,715
11-Mar$960$66,755
16-Mar$5,260$72,015
19-Mar$3,830$68,185
31-Mar$128$68,057
Accounts Receivable—Company AE  No. 106.1
DatePRDebitCreditBalance
31-DecBalance$0
11-Jan$5,500$5,500
11-Feb$5,500$0
Accounts Receivable—Company WS No. 106.2
DatePRDebitCreditBalance
31-DecBalance$0
25-Mar$2,800$2,800
Accounts Receivable—Company EL No. 106.3
DatePRDebitCreditBalance
31-DecBalance$0
24-Mar$9,047$9,047
Accounts Receivable—Company IFM No. 106.4
DatePRDebitCreditBalance
31-DecBalance$3,000
30-Mar$2,220$5,220
Accounts Receivable—Corporation L No. 106.5
DatePRDebitCreditBalance
31-DecBalance$0
13-Jan$5,200$5,200
20-Jan$500$4,700
22-Jan$4,700$0
Accounts Receivable—Company G 106.6
DatePRDebitCreditBalance
31-DecBalance$2,668
9-Jan$2,668$0
Accounts Receivable—Company D No. 106.7
DatePRDebitCreditBalance
31-DecBalance$0
23-Feb$3,220$3,220
9-Mar$3,220$0
Accounts Receivable—Incorporation KC No. 106.8
DatePRDebitCreditBalance
31-DecBalance$0
26-Jan$5,800$0$5,800
Accounts Receivable—Incorporation D No. 106.8
DatePRDebitCreditBalance
31-DecBalance$0
Merchandise inventory—Incorporation D No. 119
DatePRDebitCreditBalance
31-DecBalance$0
7-Jan$5,800$5,800
13-Jan$3,560$2,240
15-Jan$600$2,840
17-Jan$58$2,782
24-Jan$496$2,286
26-Jan$9,000$11,286
26-Jan$4,640$6,646
3-Feb$90$6,556
23-Feb$2,660$3,896
25-Mar$2,002$1,894
30-Mar$1,048$846
Compute supplies No. 126
DatePRDebitCreditBalance
31-DecBalance$580
8-MarBalance$2,730$3,310
Prepaid Insurance No. 128
DatePRDebitCreditBalance
31-DecBalance$1,665
Prepaid Rent No. 131
DatePRDebitCreditBalance
31-DecBalance$825
1-Feb$2,475$3,300
Office equipment No. 163
DatePRDebitCreditBalance
31-DecBalance$8,000
Accumulated depreciation- Office equipment No. 164
DatePRDebitCreditBalance
31-DecBalance$400
Computer equipment No. 167
DatePRDebitCreditBalance
31-DecBalance$20,000
Accumulated depreciation- Computer equipment No. 168
DatePRDebitCreditBalance
31-DecBalance$1,250
Accounts payable No. 201
DatePRDebitCreditBalance
31-DecBalance$1,100
7-JanBalance$5,800$6,900
17-JanBalance$5,800$1,100
24-JanBalance$496$604
26-JanBalance$9,000$9,604
3-FebBalance$8,504$1,100
8-MarBalance$2,730$3,830
9-MarBalance$3,830$0
Wages payable No. 210
DatePRDebitCreditBalance
31-DecBalance$500
4-Jan$500$0
Unearned computer services revenue No. 236
DatePRDebitCreditBalance
31-DecBalance$1,500
11-Jan$1,500$0
Common stock No. 307
DatePRDebitCreditBalance
31-DecBalance$73,000
5-Jan$25,000$98,000
Retained earnings No. 318
DatePRDebitCreditBalance
31-DecBalance$7,360
Dividends No. 319
DatePRDebitCreditBalance
15-Feb$4,800$4,800
Computer services revenue No. 403
DatePRDebitCreditBalance
11-Jan$7,000$7,000
16-Jan$4,000$11,000
16-Mar$5,260$16,260
24-Mar$9,047$25,307
Sales No. 413
DatePRDebitCreditBalance
13-Jan$5,200$5,200
26-Jan$5,800$11,000
23-Feb$3,220$14,220
25-Mar$2,800$17,020
30-Mar$2,220$19,240
Sales returns and allowances No. 414
DatePRDebitCreditBalance
20-Jan$500$500
Sales discounts No. 415
DatePRDebitCreditBalance
20-Jan$47$0$47
Cost of goods sold No. 502
DatePRDebitCreditBalance
13-Jan$3,560$3,560
26-Jan$4,640$8,200
23-Feb$2,660$10,860
25-Mar$2,002$12,862
30-Mar$1,048$13,910
Depreciation expense - Office equipment No. 612
DatePRDebitCreditBalance
Depreciation expense - Computer equipment No. 613
DatePRDebitCreditBalance
Wages expense  No. 623
DatePRDebitCreditBalance
4-Jan$125$125
31-Jan$1,250$1,375
26-Feb$1,000$2,375
Insurance expense No. 637
DatePRDebitCreditBalance
Rent expense  No. 640
DatePRDebitCreditBalance
Computer supplies expense  No. 652
DatePRDebitCreditBalance
Advertising expense No. 655
DatePRDebitCreditBalance
5-Feb$600$600
Mileage expense No. 676
DatePRDebitCreditBalance
27-Feb$192$192
31-Mar$128$320
Miscellaneous Expenses  No. 677
DatePRDebitCreditBalance
Repairs Expense—Computer  No. 684
DatePRDebitCreditBalance
11-Mar$960$960

3.

To determine

Prepare a partial worksheet of Company BS for the three months ended March 31, 2018.

3.

Expert Solution
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Explanation of Solution

Worksheet: A worksheet is the summarized form of accounting information which is made in order to ensure that the accounts are made properly.

Prepare a partial worksheet of Company BS for the three months ended March 31, 2018.

Financial Accounting Fundamentals, Chapter 4, Problem 4SP

Table (2)

4.

To determine

Prepare a single step income statement of Company BS for the three months ended March 31, 2018.

4.

Expert Solution
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Explanation of Solution

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Single-step income statement:  This statement displays the total revenues as one line item from which the total expenses including cost of goods sold is subtracted to arrive at the net profit /net loss for the period.

Prepare a statement of income of Company BS for the three months ended March 31, 2018.

Company BS
Statement of Income
For the three months ended March 31, 2018
ParticularsAmountAmount
Revenues
Computer services revenue$25,307
Net sales ()$18,693
Total revenues$44,000
Expenses
Cost of goods sold$14,052
Depreciation expense—Office equipment$400
Depreciation expense—Computer equipment$1,250
Wages expense$3,250
Insurance expense$555
Rent expense$2,475
Computer supplies expense$1,305
Advertising expense$600
Mileage expense$320
Repairs expense—Computer$960
Total expenses($25,167)
Net income$18,833

Table (3)

The net income of Company BS for the three months ended March 31, 2018 is $18,833.

5.

To determine

Prepare a statement of retained earnings of Company BS for the three months ended March 31, 2018.

5.

Expert Solution
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Explanation of Solution

Statement of retained earnings: This is an equity statement which shows the changes in the stockholders’ equity over a period of time.

Prepare a statement of retained earnings of Company BS for the three months ended March 31, 2018.

Company BS
Statement of Retained earnings
For the three months ended March 31, 2018
ParticularsAmountAmount
Retained earnings as on December 31, 2017 $7,360
Add: Net income $26,193
  $33,553
Less: Dividends ($4,800)
Retained earnings as on March 31, 2018 $21,393

Table (4)

The retained earnings of Company BS for the three months ended March 31, 2018 is $21,393.

6.

To determine

Prepare a classified balance sheet of Company BS as of March 31, 2018.

6.

Expert Solution
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Explanation of Solution

Classified balance sheet: The main elements of balance sheet assets, liabilities, and stockholders’ equity are categorized or classified further into sections in a classified balance sheet. Assets are further classified as current assets, long-term investments, property, plant, and equipment (PPE), and intangible assets. Liabilities are classified into two sections current and long-term. Stockholders’ equity comprises of common stock and retained earnings. Thus, the classified balance sheet includes all the elements under different sections.

Prepare a classified balance sheet as of March 31, 2018.

Company BS
Balance sheet
As of  March 31, 2018
AssetsAmountAmount
Current assets
  Cash$68,057
  Accounts receivable ()$22,867
  Merchandise inventory$704
  Computer supplies$2,005
  Prepaid insurance$1,110
  Prepaid rent$825
  Total current assets$95,568
Plant assets
  Office equipment$8,000
  Accumulated depreciation—Office equipment($800)$7,200
  Computer equipment$20,000
  Accumulated depreciation—Computer equipment($2,500)$17,500
  Total plant assets$24,700
Total assets$120,268
Liabilities and Stockholder's Equity
Liabilities
Current liabilities
  Wages payable$875
Stockholders’ Equity
Common stock$98,000
Retained earnings$21,393
Total equity$119,393
Total liabilities and equity$120,268

Table (5)

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Chapter 4 Solutions

Financial Accounting Fundamentals

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