AFM102 Lecture Notes - Lecture 4: Retained Earnings, Office Supplies, Accounts Payable

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apricottoad869

15 Oct 2015

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM102

Professor

Peter Blake

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Document Summary

Business transactions source document accounting department analyse and. Record (at least 2 accounts) (analysing means what accounts, and up/down?) Widget business sell products and services: jan 1st: invest ,000 cash in exchange for 1,000 common shares, jan 1st: cash (company bank account which has gone up by ,000) and common. Assets= liabilities + equity (revenues expenses + capital dividends) An asset going up is a debit. Cr common shares 10,000: buy worth of office equipment cash due in 60 days, office equipment went up and liabilities went up by (accounts payable) : buy worth of office supplies for cash, office supplies is up by and cash is down by . : sell widget repair services to abc corp. for , due in 30 days, accounts receivable in 30 days up by . Service revenues (sales) go up by .

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

On July 1, 2013, Lula Plume created a new self-storage business,Safe Storage Co. The following transactions occurred during thecompany's first month.

July 1 Plume invested $30,000 cash and buildings worth$150,000
in the company in exchange for common stock.
2 The company rented equipment by paying $2,000 cash for
the first month's (July) rent.
5 The company purchased $2,400 of office supplies for cash.
10 The company paid $7,200 cash for the premium on a
12-month insurance policy. Coverage begins on July 11.
14 The company paid an employee $1,000 cash for two weeks
salary earned.
24 the company collected $9800 cash for storage fees from
customers.
28 The company paid $1000 cash for two weeks salary earned
by an employee.
29 The company paid $950 cash for minor repairs to a leaking
roof.
30 the company paid $400 cash for this month's telephonebill.
31 The company paid $2000 cash for dividends.

The company's chart of accounts follows:

101 Cash
106 Accounts Receivable
124 Office Supplies
128 Prepaid Insurance
173 Buildings
174 Accumulated Depreciation- Buildings
209 Salaries Payable
307 Common Stock
318 Retained Earnings
319 Dividends
401 Storage Fees Earned
606 Depreciation Expense- Buildings
622 Salaries Expense
637 Insurance Expense
640 Rent Expense
650 Office Supplies Expense
684 Repairs Expense
688 Telephone Expense
901 Income Summary

Required:
1. Use the balance column format to set up each ledgeraccount
listed in its chard of accounts.
2. Prepare journal entries to record the transactions for Julyand
post them to the ledger accounts. Record prepaid and unearned
items in balance sheet accounts.
3. Prepare an unadjusted trial balance as of July 31.
4. Use the following information to journalize and postadjusting
entries for the month:
a. Two-thirds of one month's insurance coverage has expired.
b. At the end of the month, $1525 of office supplies arestill
available.
c. This month's depreciation on the buildings is $1500.
d. An employee earned $100 of unpaid and unrecorded salary
as of month-end.
e. The company earned $1150 of storage fees that are not yet
billed at month-end.
5. Prepare the adjusted trial balance as of July 31. Preparethe
income statement and the statement of retained earnings for
the month of July and the balance sheet at July 31, 2013.
6. Prepare journal entries to close the temporary accountsand
post these entries to the ledger.
7. Prepare a post-closing trial balance.

Required:

1. Correct the recorded activity for Android for Life during July on the attached spreadsheet

2. Correct the balance sheet and income statement for Android for Life in July 2015 on the attached spreadsheet.

3. Is the large decline in cash a concern?

Android for Life Inc.

On July 1, 2015, Andy incorporated her business under the name Android for Life, Inc. Listed below are various transactions that occurred during the remainder of the year:

(a) On July 1, Andy purchased all of Android for Life common stock for $100,000 cash.

(b) On July 1, Android for Life paid $3,000 to an attorney to prepare and file incorporation documents with the State of Texas.

(c) On July 2, Android for Life borrowed $100,000 from a local bank. The bank note required payment of principal in four annual installments of $25,000 beginning on July 1, 2016. In addition, the note specified interest payments of 6%, with the first payment due on July 1, 2016.

(d) On July 3, Android for Life signed a five-year lease on a building to be used as the veterinary clinic. The lease required a payment of $10,000 per month , payable on the first day of each month. Android for Life paid the amount for July on the date the lease was signed.

(e) On July 5, Android for Life paid $150,000 for medical equipment, office furniture, and other equipment.

(f) On July 6, Android for Life purchased various inventory items for $8,500 cash.

(g) Also on July 6, Android for Life purchased $500 worth of office supplies for cash.

(h) On July 28, Android for Life paid employees wages of $8,000 (which included Andyâs salary of $6,000).

(i) During July, Android for Life received $30,000 from clients for office visits and sales of merchandise (food, clothes, etc.).

A review of Android for Life records at July 31, 2015, revealed the following:

(j) Clients still owed Android for Life $3,500 for services performed during July but not yet billed. These amounts are expected to be billed and collected in August.

(k) At the end of July, a physical count of inventory revealed that $1,000 of inventory was still on-hand.

(l) At the end of July, a physical count of office supplies revealed that $100 of supplies were still on-hand.

(m) Depreciation on the equipment for July was estimated to be $1,250.

(n) Interest needs to be recorded on the note payable.

	Assets								Liabilities		Stockholders' Equity
		Accounts		Office	Property, Plant	Intangible	Accumulated		Notes	Interest	Common	Retained
Transaction	Cash	Receivable	Inventory	Supplies	& Equipment	Assets	Depreciation	=	Payable	Payable	Stock	Earnings
purchase of Common Stock	(100,000)										(100,000)
Payment for Articles of Incorporation	(3,000)					3,000
Note / Loan (interest expense on income statement?)	100,000								100,000
Long-term Lease (show on income statement $10k?)	(10,000)											(10,000)
Long-term Equipment	(150,000)				150,000
Inventory Items	(8,500)		8,500
Office Supplies	(500)			500
Wages	(8,000)											(8,000)
Office Visits/ Merchandise	30,000											30,000
Services Performed		3,500										3,500
Inventory Used (income statement expense?)	7,500		(7,500)
Office Supplies Used (income statement expense?)				(400)								(400)
Depreciation on Equipment (income statement expense?)							(1,250)					(1,250)
Interest Expense (income statement expense?)										6,000		(6,000)

Totals	(142,500)	3,500	1,000	100	150,000	3,000	(1,250)		100,000	6,000	(100,000)	7,850

Android Inc.
Income Statement
For the month ended July 31st, 2015


Revenues
Sales and Revenues		33,500
Less: Cost of goods Sold		(7,500)
Gross Profit		26,000


Expenses
Organizational Expenses	3,000
Salaries Expense	8,000
Office Supplies Expense	400
Depreciation Expense	1,250
Interest Expense	500
TOTAL EXPENSE		13,150

NET INCOME		12,850






Android Inc.
Balance Sheet
As at July 31st, 2015
Assets:
Current Assets
Cash	60,000
Accounts Receivable	3,500
Inventory	1,000
Office Supplies	100
Total Current Assets		64,600

Plant Property and Equipment
Plant Property and Equipment	150,000
Less: Accumulated Depreciation	(1,250)	148,750

TOTAL ASSETS		213,350


LIABILITIES
Notes Paybles	100,000
Interest Payale	500
TOTAL LIABILITIES		100,500

Shareholder's Equity
Common Stock	100,000
Retained Earnings	12,850
TOTAL Shareholder's Equity		112,850

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY		213,350

yellowchimpanzee681

AFM102 Lecture Notes - Lecture 4: Retained Earnings, Office Supplies, Accounts Payable

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