Case Study 1 (Part A)
(Learning Objectives 4, 5, 6: Analyze the impact of business transactions on accounts; record (journalize and post) transactions in the books; construct and use a trial balance) During the first month of operation of Gordon Construction, Inc., completed the following transactions:
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June 2
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Gordon received $55,000 cash and issued common stock to the stockholders.
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3
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Purchased supplies, $3,000, and equipment, $5,200, on account.
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4
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Performed services for a client and received cash, $6,300.
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7
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Paid cash to acquire land, $37,000.
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11
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Performed services for a customer and billed the customer, $1,200. Johnson expects to collect within one month.
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16
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Paid partial for the equipment purchased June 3 on account $2,800.
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17
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Paid the telephone bill, $230.
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18
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Received partial payment from customer on account, $700.
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22
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Paid the water and electricity bills, $400.
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29
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Received $5,000 cash for repairing the pipes of a customer.
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30
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Paid employee salary, $4,300.
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30
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Declared and paid dividends of $3,000.
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Requirements
- 1. Record each transaction in the journal. Key each transaction by date. Explanations are not required.
- 2. Post the transactions to the T-accounts, using transaction dates as posting references.
- 3. Prepare the trial balance of Gordon Construction, Inc., at June30, 20xx.
- 4. The manager asks you how much in total resources the business has to work with and, how much it owes.
Case Study 1 (Part B)
Requirement 1
(Learning Objectives 3, 4: Adjust the accounts; construct the financial statements) Record the following month end adjusting entries for Gordon Construction, Inc. at June 30, 20xx
Month end accruals at June 30, 20xx:
- a. Accrued advertising revenue at June 30, $3,100.
- b. Supplies used during June, $2,300.
- c. Accrued salary expense at June 30 for Monday, Tuesday, and Wednesday. The five-day weekly payroll is $6,100 and will be paid on Friday.
Requirement 2
Prepare adjusted trial balance for Gordon Construction at June 30, 20xx.