Question 1
In March 2016, the stockholder organized a corporation to provide package delivery services. The company, called TD Ltd, began operations immediately. Transactions during the month of March were as follows:
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Mar 2
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The corporation issued 40,000 shares of capital stock to stockholder in exchange for $80,000 cash
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Mar 4
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Purchased a truck for $45,000. Make a $15,000 cash down payment and issued a note payable for the remaining balance
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Mar 5
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Paid Sloan properties (property holder) $2,500 to rent office space for the month
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Mar 9
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Billed customers $11,300 for services for the first half of March
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Mar 15
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Paid $7,100 in salaries earned by employees during the first half of March
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Mar 19
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Paid Bill's Auto (Automobile repair company) $900 for maintenance and repaiiservices on the company truck
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Mar 20
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Collected $3,800 of the amount billed to customers on March 9
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Mar 28
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Billed customers $14,400 for services performed during the second half of the month
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Mar 30
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Paid $7,500 in salaries earned by employees during the second half of the month.
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Mar 30
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Received an $830 bill from SY Petroleum for the fuel purchased in March. The entire amount is due by April 15.
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Mar 30
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Declared a $1,200 dividend payable on April 30.
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Required
a. Prepare journal entries for each transaction
b. Post each transaction to the appropriate ledger accounts (use T- account format)
c. Prepare trial balance dated March 31,2016
The accounts titles used by TD Ltd are:
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Cash
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Retained earnings
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Accounts receivable
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Dividend
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Truck
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Services revenue
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Notes payable
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Maintenance expenses
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Accounts payable
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Fuel expenses
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Dividend payable
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Salaries expenses
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Capital stock
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Rent expenses
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Question 2
Country Theater
Unadjusted Trial Balance August 31, 2016
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Dr
$
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Cr
$
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| Cash |
20,000 |
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| Prepaid film rental |
31,200 |
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| Land |
120,000 |
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Building
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168,000
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Accumulated depreciation: building
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14,000
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Fixtures and equipment
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36,000
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Accumulated depreciation: fixtures and equipment
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12,000
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Notes payable
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180,000
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Accounts payable
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4,400
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Unearned admission revenue (received from YCA)
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1,000
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Income tax payable
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4,740
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Capital stock
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40,000
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Retained earnings
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46,610
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Dividends
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15,000
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| Admissions revenue |
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305,200 |
| Service revenue |
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14,350 |
| Salaries expenses |
68,500 |
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| Film rental expense |
94,500 |
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| Utilities expenses |
9,500 |
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| Depreciation expenses: buildings |
4,900 |
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| Depreciation expenses: fixtures and equipment |
4,200 |
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| Interest expense |
10,500 |
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| Income taxes expenses |
40,000 |
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622,300 |
622.300 |
Other data
a. Film rental expense for the month is 15,200. However, the film rental expenses for several months have been paid in advance.
b. The building is being depreciated over a period of 20 years (240 months)
c. The fixtures and equipment are being depreciated over a period of five years (60 months)
d. On the first day of each month, the theater pays the interest that accrued in the prior month on its note payable. At August 31, accrued interest payable on this note amounts to $1,500.
e. The theater allows the local organization YCA to bring children attending summer camp to the movies on any weekday afternoon for a fixed fee of $500
per month. On June 28, the YCA made a $1,500 advance payment covering the months of July, August and September.
f. The theater receives a percentage of the revenue earned by Taste Corporation, the service operating the snack bar. For snack bar sales in August, Taste owes Country Theater $2,250 payable on September 10. No entry has yet been made to record this revenue.
g. Salaries earned by employees, but not recorded or paid as of August 31, amount to $1,700. No entry has yet been made to record this liability and expenses.
h. Income taxes expense for August is estimated at $4,200. This amount will be paid in the September 15 installment payment.
Instructions
a. For each of the numbered paragraph, prepare the necessary adjusting entry.
b. Based on the adjusting entries prepared on part a, to prepare the adjusted trial balance at 31 August 2016.
c. Based on the adjusted trial balance prepared in part b, prepare the Income Statement, Statement of Retained earnings and Balance Sheet as at 31 August 2016.