Paul Hooke owns Answer and Message Center. The post-closing trial balance as of December 31, 2009, is shown below. Table
ANSWER AND MESSAGE CENTER
December 31 2009
Accumulated Depreciation - Equipment
Payable on Equipment Loan
P. Hooke, Capital
Transactions completed during 2010 are as shown here.
1. Phone answering fees were $14,800 in cash and $3,010 on account for the year.
2. Message services fees totalled $13,140 for the year; $8,240 of that was in cash and the remainder was on account
3. Supplies costing $140 were purchased on account
4. On June 20, 2010, the company paid $2,115 on the equipment loan and $429 on accrued interest. Of the $429, $220 was accrued interest in 2009 and the remainder was for accrued interest in the first half of 2010
5. $2,170 in salaries were paid
6. Prepaid insurance on the equipment was $320
7. Telephone expense of $1,860 was paid
8. Accounts receivable of $3,530 were collected
9. Paul Hooke withdrew $12,800 for personal use.
10. Paid $750 on accounts payable
The following should be used for making adjusting entries.
a) A physical count of the supplies showed that $125 had been used during the year
b) Accrued interest on the note payable is $155.
c) Insurance costing $520 expired during the year.
d) Depreciation on the equipment was $1600.
e) The December telephone bill of $170 has not been paid or recorded
A. Open T accounts for each of the accounts listed below. Insert beginning balances from the post-closing trial balance.
100 Cash 105 Accumulated Depreciation – Equipment
101 Accounts Receivable 200 Accounts Payable
102 Prepaid Insurance 201 Interest Payable
103 Supplies Inventory 202 Telephone Expense Payable
104 Equipment ` 500 Salary Expense
203 Payable on Equipment Loan 501 Telephone Expense
300 P. Hooke Capital 502 Supplies Expense
301 P. Hooke, Drawing 503 Insurance Expense
350 Income Summary 504 Depreciation Expense
400 Answering Service Fees 505 Interest Expense
401 Message Service Fees
B. Prepare journal entries to record the transactions completed in 2010
C. Post the entries to the T accounts
D. Prepare a 10-column worksheet
E. Prepare an income statement, a statement of changes in owner’s equity, and an unclassified balance sheet.
F. Journalize and post the adjusting entries
G. Journalize and post the closing entries
H. Prepare a post-closing trial balanc
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