acct 3311 problems ch 3

acct 3311 problems ch 3 - ACCT 3311 FALL 2007 PAGE 3-1...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Sheet1 Page 1 ACCT 3311 FALL 2007 PAGE 3-1 Example 1. Jim Kaufman and Ron Bruckman started a business in January of 2006. The following transactions occurred during 2006: Jan. 2 The KB Corporation was formed. 10,000 shares of common stock were issued for $10 per share. Jan. 3 The Corporation borrowed $50,000 by signing a three year 10% note with interest payable each January 3 (first payment due 1-3-2007) Jan. 4 The Corporation signed a one year lease on an office. $24,000 rent was paid for the year. Jan. 5 The Corporation purchased office furniture for $30,000. The furniture will be written off over five years with no salvage value. Jan. 5 The Corporation purchased computers, printers, fax machines, etc., for $27,000. These will be written off over three years with no salvage value. Jan. 5 A one year insurance policy was purchased for $4,000. The following occurred during 2006: At the end of 2006, KB estimated that uncollectible accounts would amount to $1,000 on the outstanding receivables at year end. A year end inventory showed $1,500 of supplies were still on hand. KB estimated a quarterly tax payment of $4,000 would be made in the first quarter of 2007 for 2006 income. Required: 1. Prepare journal entries for the above transactions. 2. Prepare an income statement for 2006. 3. Prepare a balance sheet at 12-31-2006. 3 ACCT 3311 FALL 2007 PAGE 3-2 T ACCOUNTS FOR JIM KAUFMAN EXAMPLE Cash Accounts receivable Allowance for uncoll. Accts Acc. Deprec. Furniture Inventory Supplies Equipment h Supplies were purchased on account for $5,000. h Wages and salaries of 32,000 were paid during 2006. h Utility bills of $3,000 were received. h Merchandise costing $80,000 was purchased on account. h Merchandise costing $60,000 was sold on account for $190,000 during 2006. h Customers paid $95,000 for the purchases at year end. h Accounts payable totaling $74,000 were paid during the year. h Income taxes of $8,000 were paid during 2006. h Dividends of $15,000 were declared on December 15, 2006, to be paid in January of 2007.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Sheet1 Page 2 Furniture Acc. Deprec. Equipment Dividends Retained earnings Insurance expense Income taxes payable Income tax expense Dividends payable Sales Supplies expense Rent expense Notes payable Bad debt expense Accounts payable Interest payable Common stock Cost of sales Wages & salaries exp. Interest expense I ACCT 3311 FALL 2007 PAGE 3-3 Example 2. On June 1, 2006, Peter Thomas started a business with a $20,000 cash investment. The business is organized as a sole proprietorship. . On June 2, Peter purchased $15,000 worth of merchandise to sell. Peter will use the periodic inventory system. During the month cash sales totaled $19,000. Cash expenses of $3,500 were incurred. An inventory taken at the end of the month showed $2,000 of the merchandise still on hand. During July, Peter purchased $18,000 worth of merchandise. July cash sales totaled $26,000. An
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/02/2008 for the course ACCT 3311 taught by Professor Lee during the Spring '08 term at Collin College.

Page1 / 12

acct 3311 problems ch 3 - ACCT 3311 FALL 2007 PAGE 3-1...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online