I'm trying to finish up my general journal and am uncertain on afew of these.
1. July 21. Pay the employees 6850 for work performed during the3rd week of july.
Debit Wages expense for 6850, credit cash 6850?
2. July 23. Receive a 48250 advance payment from the university.The advance payment is for 6 months of work which will be performedfrom august 1 2015 to january 31 2016.
Debit cash and credit accounts receivable??? Not sure on thisone.
3. July 25. Complete a special mowing job for the golf course.Total price for job is 12,000, the golf course pays 6,000 cash onthis date and will pay the remainder on august 25.
This one should have four entry's? Debit cash 6,000, Debit Accreceivable 6,000, credit service revenue 12,000??? Not surehere.
4. July 27, complete mowing job for customer. Customer pays $425cash.
Debit cash 425, credit service revenue 425?
5. July 28. Pay employees 6350 for work performed during fourthweek of july.
Debit Wages expense 6,350, credit cash 6,350?
6. July 31. Invoice the property management company $42,500 forjuly mowing work. The property management company will pay theinvoice on the 20th of the next month.
Debit accounts receivable 42,500, credit unearned revenue???This seems wrong to me, but I'm not sure why.
7. July 31. Pay the cash dividend that was declared on July 5.Cash dividend was for 27,000.
I think I'm supposed to debit dividends payable and creditcash?
All help is greatly appreciated. Thanks.
I'm trying to finish up my general journal and am uncertain on afew of these.
1. July 21. Pay the employees 6850 for work performed during the3rd week of july.
Debit Wages expense for 6850, credit cash 6850?
2. July 23. Receive a 48250 advance payment from the university.The advance payment is for 6 months of work which will be performedfrom august 1 2015 to january 31 2016.
Debit cash and credit accounts receivable??? Not sure on thisone.
3. July 25. Complete a special mowing job for the golf course.Total price for job is 12,000, the golf course pays 6,000 cash onthis date and will pay the remainder on august 25.
This one should have four entry's? Debit cash 6,000, Debit Accreceivable 6,000, credit service revenue 12,000??? Not surehere.
4. July 27, complete mowing job for customer. Customer pays $425cash.
Debit cash 425, credit service revenue 425?
5. July 28. Pay employees 6350 for work performed during fourthweek of july.
Debit Wages expense 6,350, credit cash 6,350?
6. July 31. Invoice the property management company $42,500 forjuly mowing work. The property management company will pay theinvoice on the 20th of the next month.
Debit accounts receivable 42,500, credit unearned revenue???This seems wrong to me, but I'm not sure why.
7. July 31. Pay the cash dividend that was declared on July 5.Cash dividend was for 27,000.
I think I'm supposed to debit dividends payable and creditcash?
All help is greatly appreciated. Thanks.
Related questions
Case Study Background
Assume that Brisbane Divers (ABN 34 255 712444) operates as a partnership and you and your groupmembers are the owners of that company. Brisbane Divers specializesin selling locally manufactured diving equipment and takes studentson diving courses in its boat. The business charges GST on allinventory sales and dive lessons and pays GST on inventorypurchases and most business expenses.
Employees
Brisbane Divers employs two casual assistants. Julia Hiltonworks as a dive instructor on the boat, and Peter Ball works in theshop selling stock, and taking bookings for dive lessons. Eachemployee works between 20 to 30 hours per week, depending on theseason and demand. Payday is every second Saturday. The followinginformation is used to calculate their wages:
Page 1 of 7
Name | Role | Gross pay- Per hour ($) | PAYG tax Per hour ($) |
Julia Hilton | Dive instructor | 25 | 6 |
Peter Ball | Shop assistant | 20 | 5 |
At the end of July, Brisbane Divers owed 4 hours pay toboth Peter and Julia.
Note: Do not use the employee section of MYOB,record the wages expense and tax as a cash payment.
Goods and Services Tax
All transactions which incur GST are identified, the GST is 10%
Goods and Services Tax:
Brisbane Divers pays GST of 10% on all business expenses, exceptWages.
Merchandise Inventory:
The following is a list of closing inventory and the suppliersas at July 31 2018.
Each of the above items of inventory is quoted excludingGST.
Restocking inventory.
The required inventory is purchased on credit under the terms ofpayment required by the suppliers.
Your group members have a good relationship with each of thesuppliers once your company places an order, the suppliers willdeliver them free of charge the same day.
Lessons:
A part of Brisbane Diversâ income is earned from conductingdiving lessons.
The lessons are quoted excluding GST.
Lessons revenue must be recorded separatelyfrom sales.
Quantity on hand | Item Code | Description | Cost Price | Sale Price | Supplier |
23 | DMS | Diving Masks | $130 | $250 | Scuba Gear Ltd. |
24 | EPS | Exposure Protection Suits | $150 | $280 | Planet Dives Ltd |
38 | SNO | Snorkel | $10 | $20 | SeaWorld Ltd |
Item Code | Lesson Type | Fee Course |
DL | Diving lessons | $150 |
Suppliers account balances as at July 31, 2018:
Name | Address | ABN | Account Balance |
Planet Dives Ltd. | 400 Sydney Road, Wingy | 30 444 777 333 | $944 |
Scuba Gear Ltd. | 11, Tide Towers Williamsville. | 20 888 555 222 | $1280 |
SeaWorld Ltd. | 79 Rountree road, Spotswood | 92 000 333 666 | $2330 |
Each of the above account balances represents deliveries ofinventory received on July 28th all purchases are on terms net 30days.
Customer Information:
Brisbane Divers sells most of its inventory strictly on a cashbasis, but the business has three credit customers. Terms ofpayment for these customers are net 30 days.
Name | Address | ABN | Date Last Invoice | Account Balance |
Swimmers World | 13 Colombo Street, , VIC 3292 | 50 999 555 666 | July 26 | $2 350 |
Brisbane Academy | 47 Bloomy Road, , VIC 3292 | 92 555 888 111 | July 19 | $1 940 |
Westley Academy | 33 Departure Drive VIC 4000 | 20 888 444 999 | July 13 | $4 400 |
Trial Balance as at July 31, 2018
Ledger Account | Debit ($) | Credit ($) |
Bank | 16 096 | |
Stationery | 2 500 | |
Prepaid Insurance | 3 000 | |
Merchandise Inventory | 6 970 | |
Trade Debtors | 8 690 | |
Trade Creditors | 4 554 | |
Motor Vehicle | 22 500 | |
Accumulated Depreciation of Motor Vehicle. | 6 850 | |
Diving Equipment and Boat | 38 900 | |
Accumulated Depreciation of Dive Equip & Boat | 11 230 | |
Shop Fittings | 5 750 | |
Accumulated Depreciation of Shop Fittings | 575 | |
GST Collected | 4 198 | |
GST Paid | 2 837 | |
Capital | 53 000 | |
Loan - ANZ Bank, William Street. | 25 500 | |
PAYG Tax Payable | 540 | |
Wages Payable | 136 | |
Electricity Payable | 660 | |
$107 243 | $107 243 |
Transactions: August 2018
Date | Description |
1 | Paid rent for 2(two) months - $4,400 (GST Inclusive). [chq90] |
3 | Paid Cash for vehicle expenses- $275 â (GST Inclusive) [chq91] |
3 | Paid Scuba Gear Ltd. for July account. [chq 93] |
4 | Received payment from Swimmers World for July account. |
4 | Purchased more inventory 25 x DMS, 20 x EPS, 25 x SNO |
4 | Cash sales: Inventory sold: |
4 | Paid electricity bill for July $ 660(including GST) [chq 94] |
5 | Five cash customers paid for diving course. ($150+ GST eachperson). |
7 | Paid SeaWorld Ltd. for July account. [chq 95] |
7 | Paid advertising in the Williamsville Times - $275(GSTInclusive) [chq 96] |
8 | Sales Invoice sent to Swimmers World for the following items: 15x DMS, 18 x SNO |
9 | Pay day. Julia was paid for 30 hours and Peter was paid for 22hours, which includes wages owing from July [chq 97 and 98] |
12 | Received payment from Brisbane Academy World for Julyaccount. |
14 | Cash sales: Inventory sold: 10 x DMS, 12 EPS |
16 | Cash drawings â Cheque payable to one of your groupmembers$5000[chq 99] |
16 | Paid Planet Dives Ltd. for July accounts. [chq 100] |
19 | 10 cash customers paid for diving course. ($150+GST eachperson).( The course commences on 20th of August) |
21 | Received payment from Westley Academy for July account |
23 | Paid monthly repayment to ANZ for bank loan. |
23 | Pay day. Peter was paid for 20 hours and Julia was paid for 25hours. [chq 102 and 103] |
25 | Paid Electricity for August - $880 (GST Inclusive) [chq 104] |
29 | Swimmers World paid for items purchased on August 8. |
31 | Paid Telephone Expenses for August $660 (including GST) [chq105] |
Adjustments at 31 August 2018
Depreciation of motor vehicle 20 % per annum at cost.
Depreciation of diving equipment and boat $6000 per annum.
Depreciation of Shop Fittings 10 % per annum at written downvalue.
Accruedwages:Peterâ28hourandJulia22hours.
Accrued Cleaning expenses for August $ 1100(including GST). Atax invoice has been
received.
Stationery on hand at 31 August 2018 totaled $ 1590.
The portion of prepaid insurance expired as of 31 August 2018 is$2,500.
Water bill for August is unpaid and unrecorded $750 Plus GST. Atax invoice has been
received.
Part A: Manual Recording
IMPORTANT: Part A ManualRecording
Required:
Record the opening balances as at 1 August 2018 in theappropriate general ledger accounts.
Record August monthâs transactions in the general journal andpost these to the generalledger.
Record end of month adjustments in the general journal and postthese to the general ledger.
Prepare a Trial Balance after end of month adjustments as at 31August 2018
PrepareanIncomeStatementforAugust2018andaBalanceSheetasat31August2018.
Part B: Computerised accounts using MYOB
1.Enterthebusinessinformation,establishachartofaccounts,recordsupplierandcustomerbalances, enter inventory balances and record opening ledgeraccount balances as at 1 August 2018.
2. Record the transactions, including the adjusting entries, forthe month of August 2018.
3. Produce Trial Balance as at August 31st, 2018 (after alladjustments). (This MUST be directly printed from MYOB).
4. Produce Transaction Journal from 1 August to 31 August forall transactions. (This MUST be directly printed from MYOB).
5. Produce Income Statement for month ended August 2018 (ThisMUST be directly printed from MYOB).
6. Produce Balance Sheet as at 31st August 2018 (This MUST bedirectly printed from MYOB).
FNEC 1600
Comprehensive Problem â Due Date: December 1, 2017
Fall 2017
Your score on the following problem will carry a weight of 13% in determining your overall course grade. A hard copy of your solution must be submitted by December 1st. Any submission after the beginning of class on that date is subject to a 10 point per day late point reduction.
Description:
You have been charged with preparing year-end adjusting entries along with a multiple-step income statement and a classified balance sheet for Fat Tire, Inc., a wholesaler of bicycles and bicycle parts. The financial statements will cover the year ended December 31, 2016. A December 31 bank reconciliation, an unadjusted trial balance, and other information to help with the adjusting entries follow.
| Fat Tire, Inc. | ||||||
| Bank Reconciliation | ||||||
| 31-Dec-16 | ||||||
| Balance per Bank Statement | $297,000 | |||||
| Deposits in Transit | $4,500 | |||||
| Bank Error (See note 1 below) | 1,200 | |||||
| Outstanding Checks | (2,000) | 3,700 | ||||
| Adjusted Balance | $300,700 | |||||
| Balance per Fat Tire's Books | $300,000 | |||||
| Interest Earned per bank statement | $450 | |||||
| Book Error (See note 2 below) | 1,170 | |||||
| NSF Check (See note 3 below) | (500) | |||||
| December bank service charges | (420) | 700 | ||||
| Adjusted Balance | $300,700 | |||||
| note 1: The bank incorrectly charged Fat Tire's account for a fee | ||||||
| that belonged to another client of the bank. | ||||||
| note 2: A check for $130 to pay a cash miscellaneous operating | ||||||
| expense was incorrectly recorded as $1,300 on Fat Tire's | ||||||
| note 3: The bank returned a bad check deposited by Fat Tire | ||||||
| that represented a receipt of payment from one of Fat Tire's | ||||||
| customers. | ||||||
| Fat Tire, Inc. | ||||||
| Unadjusted Trial Balance | ||||||
| December 31, 2016 | ||||||
| Debit | Credit | |||||
| Accounts Payable | 50,000 | |||||
| Accounts Receivable | 425,700 | |||||
| Accumulated Depreciation (Equip) | 4,305 | |||||
| Accumulated Depreciation (F & F) | 23,600 | |||||
| Advertising Expense | 18,000 | |||||
| Allowance for Doubtful Accounts | $1,500 | |||||
| Cash | $300,000 | |||||
| Common Stock | 180,000 | |||||
| Cost of Goods Sold | 2,613,000 | |||||
| Depreciation Expense | 6,455 | |||||
| Equipment | 10,000 | |||||
| Furniture & Fixtures | 50,000 | |||||
| Income Tax Expense | 228,323 | |||||
| Insurance Expense | 7,500 | |||||
| Interest Revenue | 5,200 | |||||
| Inventory | 325,000 | |||||
| Miscellaneous Operating Expense | 2,500 | |||||
| Note Payable | 35,000 | |||||
| Payroll Tax Expense | 23,680 | |||||
| Prepaid Insurance | 10,500 | |||||
| Rent Expense | 168,000 | |||||
| Rent Revenue | 4,000 | |||||
| Retained Earnings | 242,553 | |||||
| Salary Expense | 264,500 | |||||
| Sales Discounts | 42,000 | |||||
| Sales Returns | 30,000 | |||||
| Sales Revenue | 4,020,000 | |||||
| Supplies | 2,000 | |||||
| Supplies Expense | 17,000 | |||||
| Unearned Rent | 2,000 | |||||
| Utilities Expense | 24,000 | |||||
| Totals | 4,568,158 | 4,568,158 | ||||
Information related to adjusting entries:
No entries have been made for the December 31 bank reconciliation. Use the bank reconciliation provided to prepare the necessary entries.
Fat Tire pays employees and all payroll related liabilities semi-monthly. Each payment of payroll related liabilities is for the previous pay period. Thus, Fat Tire needs to accrue salaries and payroll related expenses for the December 16th-31st pay period. The following information was obtained for the last pay period of the year.
Gross Pay = $12,000
Federal Income Tax withholding rate = 20%
FICA rate for employees and employers = 8%
State unemployment taxes for the pay period = $250
Federal unemployment taxes for the pay period = $75
Fat Tire maintains a liability account for federal income tax withheld from employees and a separate liability account for its own corporate income taxes.
Based on a count taken on December 31st, the amount of supplies that remain on hand is $500.
Unbilled sales as of December 31 totaled $5,000. The cost of those bikes sold was $2,000.
The Allowance for Doubtful accounts is adjusted at the end of each year using the percentage of sales method. Fat Tires estimates that 1% of adjusted net sales will go uncollected.
The Prepaid Insurance balance represents an $18,000 one-year policy that began on July 1. The company adjusts any prepaid items on a monthly basis.
Fat Tire decided to sublease some of its rental space. On October 1, the company received $6,000 in advance from a neighboring business for 3 monthâs rent. The lease period began on October 1. Fat Tire adjusts rent related accounts on a monthly basis.
Furniture and Fixtures were acquired on January 2, 2012 at a cost of $50,000. Management selected a 10 year life and a $2,000 residual value. Fat Tire depreciates Furniture and Fixtures on a monthly basis using the straight-line method of depreciation.
The Equipment was purchased on January 2, 2015 at a cost of $10,000. Management selected a productive life of 6,000 hours and a $1,000 residual value. Fat Tire depreciates Equipment on a monthly basis using the units-of-production method. The equipment was used 200 hours in December.
The Note Payable was issued on December 1, 2016. The terms of the note state that the principal and interest is to be paid two years from the issuance date. The interest rate stated on the note is 6 percent.
Accrued advertising expenses incurred but not yet paid totaled $1,000 on December 31.
Fat Tire makes quarterly payments for its income taxes. No entry has been made for the fourth quarter income taxes of 2016 which will be paid in 2017. To make this entry, you will have to determine the Income Before Tax for the year. One-fourth of that amount represents income earned in the fourth quarter. Fat Tireâs corporate tax rate is 40%.
Required:
Prepared the adjusting journal entries required on December 31, 2016.
Prepared a multiple-step income statement for the year ended December 31, 2016. Make sure your operating expenses are listed in descending order. Use the Income statement example that I provided as supplemental notes to chapter 6 as a guide.
Prepare a classified balance sheet as of December 31, 2016. List your current assets in order of liquidity.
Note: If it helps, prepare a supplemental schedule like we completed in problem 4.6A. It may help organize your data prior to preparing the financial statements.
Appropriate Use of Office Hours:
Office hours are held so that students can ask questions about assignments and/or concepts. For assignments that are to be submitted for a grade, it is unreasonable for you to ask âis my assignment correctâ or âcan you find my mistakesâ. That is why the assignments are graded. A reasonable request is to ask âhow toâ questions if you are stuck on a step or âcan you help me understand this data or this requirementâ. We (Iâm speaking for the TAs as well) want to help, but we are not there to complete your assignments for you.
Print Formats: Be sure to use the print preview feature in Excel and adjust your spreadsheets so that they can be easily read. Points will be deducted if I have to work just to read your printouts. Use normal size fonts and make sure that when reading left to right, you do not have sheets starting on one page and finishing on another. In other words, pretend Iâm your client.
