Questions -

Q1. Brown Consulting Services organized as a corporation on January 18 and engaged in the following transactions during its first two weeks of operation:

Jan. 18 Issued capital stock in exchange for $30,000 cash.

Jan. 22 Borrowed $20,000 from its bank by issuing a note payable.

Jan. 23 Paid $100 for a radio advertisement aired on January 24.

Jan. 25 Provided $1,000 of services to clients for cash.

Jan. 26 Provided $2,000 of services to clients on account.

Jan. 31 Collected $800 cash from clients for the services provided on January 26.

a. Record each of these transactions.

b. Determine the balance in the Cash account on January 31. Be certain to state whether the balance is debit or credit.

Q2. On March 1, Dillmore Corporation had office supplies on hand of $900. During the month, Dillmore purchased additional supplies costing $600. Approximately $400 of unused office supplies remain on hand at the end of the month.

Prepare the necessary adjusting entry on March 31 to account for office supplies.

Q3. Marvin's Tax Service had earned--but not yet recorded--the following client service revenue at the end of the current accounting period:

Accounting Number Billable Hours Hourly Billing Rate

Account # 4067 10 $85

Account # 3940 14 $75

Account # 1852 16 $90

Prepare the necessary adjusting entry to record Marvin's unbilled client service revenue.

Q4. Indicate whether a debit or credit is required to close each of the following accounts. Use the symbols D if a debit is required, C if a credit is required, and N if the account is not closed at the end of the period.

a. Salary Expense

b. Unexpired Insurance

c. Consulting Fees Earned

d. Depreciation Expense

e. Dividends

f. Retained Earnings

g. Interest Revenue

h. Accumulated Depreciation

i. Income Taxes Expense

j. Unearned Revenue

k. Income Summary (of a profitable company)

l. Income Summary (of an unprofitable company)

Q5. The following information was taken from recent annual reports of Goodyear Tire & Rubber, and PPL Energy Co., a public utility:

Goodyear PPL

Net sales........................................................ $19.6 billion $5.1 billion

Average accounts receivable......................... 3.1 billion $376 million

a. Compute for each company the accounts receivable turnover rate for the year.

b. Compute for each company the average number of days required to collect outstanding receivables (round answers to nearest whole day).

c. Explain why the figures computed for Goodyear in parts a and b are so different from those computed for PPL.