ACC 100 Lecture Notes - Lecture 3: Retained Earnings, Deferral, Accounts Payable

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scarletmouse309

28 Apr 2017

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Cash: owned, has future benefit, from a past transaction, +/- Accounts receivable: right to get cash in the future due to a past sale, sell on account +, collect cash - Prepaid expense: future expense, paid for in the past to collect in the future, usually insurance/rent/advertising, get future right +, use up the right - Office supplies: future expense, received in the past to use in the future, receive +, use up - Equipment: future expense, received in the past to use in the future, receive +, use up - Intangible assets: receive in the past for use in the future, legal rights, usually patents or licenses, receive +, use up - Accounts payable: owed, paid in the future, due to a past transaction, but on account +, pay off - Loans payable: owed, paid in future, due to past borrowing, borrow cash +, pay off loans -

Related Questions

I need to journalize these transactions. Trying to keep thesebalanced is difficult, and I've been confused as to what accountsto debit/credit. If you could help me fill this out, that would begreatly appreciated.

For the past several years, Aaron Jones has operated aconsulting business from his home on a part-time basis. As ofDecember 1, 20X1, Aaron decided to move to rented quarters andincorporate his business as Progress Consulting Inc. ProgressConsulting entered into the following transactions duringDecember:

1st AaronJones invested the following assets in the business: cash, $50,000;supplies,

$10,000; and office equipment, $30,000. Mr. Jones received stockin an

amount equal to his investment in the corporation.

2nd Paid $9,000for rent for December 20X1 through February 28, 20X2.

3rd Paid$12,000 for a one year premium on property and casualty insurance.The

policy covers the period December 1, 20X1 to November 30,20X2.

4th Received $16,000 cash from a client as an advance payment forservices to be

performed in the future.

5th Purchased additional office equipment on account from Payne Companyfor $10,000.

10th Paid $7,500 for anewspaper advertisement that ran in todayâs paper.

11th Paid Payne Company$3,000 for part of the debt incurred on December 5.

12th Billed clients forservices performed on account, $5,800.

17th Received cash paymentfrom client for services performed on this date, $14,000.

18th Paid $6,000 forsupplies.

20th Billed clients forservices performed on account, $15,000.

24th Received cash paymentfrom client for services performed on this date, $2,000.

25th Received cash fromclients as payment on account, $3,000.

30th Paid $750 forutilities for December.

31st Paid cash dividend of$5,000.

These are the accounts we have:

PROGRESS CONSULTING: Chart of Accounts

11 Cash

12 Accounts Receivable

14 Supplies

15 Prepaid Rent

17 Prepaid Insurance

18 Office Equipment

19 Accumulated Depreciation

21 Accounts Payable

22 Wages Payable

23 Unearned Revenues

31 Common Stock

34 Retained Earnings

35 Dividends

37 Income Summary

41 Service Revenues

51 Insurance Expense

52 Advertising Expense

53 Rent Expense

55 Supplies Expense

57 Depreciation Expense

59 Utilities Expense

60 Wage Expense

Date		Description	Debit	Credit
Dec	1	Cash	50,000
	1	Supplies	10,000
	1	Office Equipment	30,000
	1	Common Stock		90,000
	2

yellowfish481

the following Dec 31 year-end adjusted trial balance is forHeath Wilmer Co.The credit balance in Heath Wilmer Owner Capital atthe beginning of the year, January 1, was $320,000. The Owner,Heath Wilmer, invested an additional $300,000 during the currentyear. The land held for future expansion was also purchased duringthe current year.

Heath Wilmer Co. Adjusted Trial balance December 31
Cash	$90,000
Account receceivable	18,000
Prepaid insurance	6,000
Office supplies	2,000
Investments in stocks	150,000
Land held for future expasion	300,000
Office equipment	18,000
Accumulated depreciation-Equipment		$4,000
Building	600,000
Accumulated depreciation-Building		170,000
Intangible assets-licensing agreement	50,000
Accounts payable		17,800
Salaries Payable		16,400
Long-term note payable		224,000
Heath Wilmer, Capital		620,000
Health Wilmer, Withdrawals	60,000
Service fees earned		470,800
Salaries expense	180,000
Insurance expense	12,000
Rent expense	25,000
Depreciation expense-Equipment	2,000
Depreciation expense-Building	10,000
Totals	$1,523,000	$1,523,000

Required:

1. Prepare a classified year-end balance sheet. (Note: A $22,000installment on the long-term note payable is due within oneyear.)

2. Using the information presented:

(a) Calulate the current ratio. Comment on the ability of HeathWilmer Co. to meets its short-term debts.

(b) Calulate the debt ratio and comment on the financialposition and risk analysis of Heath Wilmer Co.

(c) Using the account balances to analyze the financial positionof Heath Wilmer Co., why would the owner need to invest anadditional $300,000 in the bussiness when the business is alreadyprofitable and the owner had an existing capital balance of$320,000?

Use the below adjusted trail balance to prepare the 3 basicfinancial statements on the forms provided. Also, use the NetIncome you get to calculate EPS (Earnings Per Share) assuming theweighted average shares are 550,000 and there are no PreferredDividends.

	*Debit*	Credit
Cash	$558,160
Accounts Receivable	5,668
Computer Supplies	580
Prepaid Insurance	1,665
Prepaid Rent	825
Office Equipment	8,000
Accumulated Depreciation-Office Equipment		$400
Computer Equipment	30,000
Accumulated Depreciation-Computer Equipment		1,250
Accounts Payable		1,100
Wages Payable		500
Unearned Computer ServicesRevenue		1,500
Common Stock		83,000
Retained Earnings		10,000
Dividends	7,100
Computer Services Revenue		31,284
Depreciation Expense- OfficeEquipment	400
Depreciation Expense -Computer Equipment	1,250
Wages Expense	3,875
Insurance Expense	555
Rent Expense	2,475
Computer Supplies Expense	3,065
Advertising Expense	2,965
Mileage Expense	896
Miscellaneous Expenses	250
Repairs Expense -Computer	1,305
Totals	$129,034	$129,034

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ACC 100 Lecture Notes - Lecture 3: Retained Earnings, Deferral, Accounts Payable

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