Name_____________________________ Section __________ 4-Digit #__________
Prepare the appropriate journal entries based on this information for Year 1 and collect information that will
enable you to determine the
balances in selected accounts at the ends of Year 1 and then Year 2.
the accounts indicated below, place your final account balances in the spaces as provided.
●The Hollywood Company [the firm] was formed on June 1, Year 1, when six investors each invested $8,000
in the firm.
One investor lent $15,000 to the firm that is to be repaid on June 1, Year 2, along with $1,500
●The firm leased an office space for one year on June 1, Year 1, and moved in that same day.
rate was $3,000 and the rent for the twelve months had to be paid on February 1, Year 2.
●On June 1, Year 1, the firm rented some equipment for two years.
The firm paid $720 at the time of signing
the rental agreement and this amount covered the first twelve months.
The contract calls for a second rental
payment of $960 on June 1, Year 2, covering the second twelve months of this 2-year contract.
●On June 13, Year 1, the firm purchased some supplies for use in the business at a cost of $2,700.
amount was charged to the firm’s account.
●On June 14, Year 1, the firm returned 20% of the purchased supplies because of defects.
●On June 15, Year 1, Hollywood hired eight employees at a monthly salary of $3,000 each.