Acct301 ch3. exercise problems

Acct301 ch3. exercise problems - 1771T_c03.qxd 04:13:2006...

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B EXERCISES E3-1B (Transaction Analysis—Service Company) Brown is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. April 2 Invested $73,600 cash and equipment valued at $32,200 in the business. 2 Hired a secretary-receptionist at a salary of $667 per week, payable monthly. 3 Purchased supplies on account $1,610. (Debit an asset account.) 7 Paid office rent of $1,380 for the month. 11 Completed a tax assignment and billed client $2,530 for services rendered. (Use Service Revenue account.) 12 Received $7,360 advance on a management consulting engagement. 17 Received cash of $5,290 for services completed for Calunga Co. 21 Paid insurance expense $253. 30 Paid secretary-receptionist $2,668 for the month. 30 A count of supplies indicated that $276 of supplies had been used. 30 Purchased a new computer for $14,030 with personal funds. (The computer will be used exclusively for business purposes.) Instructions Journalize the transactions in the general journal. (Omit explanations.) E3-2B (Corrected Trial Balance) The trial balance of Cervantes Corporation, below, does not balance. CERVANTES CORPORATION T RIAL BALANCE A PRIL 30, 2007 Debit Credit Cash $11,824 Accounts Receivable 10,480 Supplies on Hand 5,934 Furniture and Equipment 12,200 Accounts Payable $14,088 Common Stock 16,000 Retained Earnings 4,000 Service Revenue 10,400 Office Expense 8,640 $49,078 $44,488 (L0 4) (L0 5) An examination of the ledger shows these errors. 1. Cash received from a customer on account was recorded (both debit and credit) as $2,760 instead of $3,660. 2. The purchase on account of a computer costing $6,400 was recorded as a debit to Office Expense and a credit to Accounts Payable. 3. Services were performed on account for a client, $4,500, for which Accounts Receivable was deb- ited $4,500 and Service Revenue was credited $450. 4. A payment of $190 for telephone charges was entered as a debit to Office Expenses and a debit to Cash. 5. The Service Revenue account was totaled at $10,400 instead of $10,560. Instructions From this information prepare a corrected trial balance. E3-3B (Adjusting Entries) The ledger of Chan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Debit Credit Prepaid Insurance $ 2,700 Supplies 2,100 Equipment 18,750 Accumulated Depreciation—Equipment $ 6,300 Notes Payable 15,000 Unearned Rent Revenue 6,975 Rent Revenue 45,000 Interest Expense –0– Wage Expense 10,500 1
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2 Chapter 3 The Accounting Information System An analysis of the accounts shows the following. 1. The equipment depreciates $188 per month. 2.
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Acct301 ch3. exercise problems - 1771T_c03.qxd 04:13:2006...

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