A ssets 111 Cash 112 Accounts Receivable 114 Prepaid Insurance 121 Land 125 Pool
ID: 2593529 • Letter: A
Question
Assets
111 Cash
112 Accounts Receivable
114 Prepaid Insurance
121 Land
125 Pool Structure
126 Accumulated Depreciation, Pool Structure
127 Fan System
128 Accumulated Depreciation, Fan System
129 Sailboats
130 Accumulated Depreciation, Sailboats Liabilities
221 Accounts Payable
222 Wages Payable
223 Mortgage Payable Owner’s Equity
311 R. Cury, Capital
312 R. Cury, Drawing
313 Income Summary
Revenue
411 Income from Services
412 Concessions Income
Expenses
511 Sailboat Rental Expense
512 Wages Expense
513 Advertising Expense
514 Utilities Expense
515 Interest Expense
516 Insurance Expense
517 Depreciation Expense, Pool Structure
518 Depreciation Expense, Fan System
519 Depreciation Expense, Sailboats
522 Miscellaneous Expense
You are to record transactions in a two-column general journal. Assume that the fiscal period
is one month. You will then be able to complete all of the steps in the accounting cycle.
When you are analyzing the transactions, think them through by visualizing the
T accounts or by writing them down on scratch paper. For unfamiliar types of
transactions, specific instructions for recording them are included. However, reason
them out for yourself as well. Check off each transaction as it is recorded.
June 1 Cury deposited $95,000 in a bank account for the purpose of buying Wind In
Your Sails, a business offering the use of small sailboats to the public at a
large indoor pool with a fan system that provides wind.
2 Bought Wind In Your Sails in its entirety for a total price of $216,100. Th
e assets include sailboats, $25,800; fan system, $13,300; pool structure, $140,000; and
land, $37,000. Paid $60,000 down and signed a mortgage note for the remainder.
June 3 Received and paid bill for newspaper advertising, $350.
3 Received and paid bill for a one-year premium for insurance, $12,000.
3 Bought additional boats from Louis Manufacturing Co. for $7,200, paying $3,200 down, with the remainder due in 30 days.
3 Signed a contract with a vending machine service to lease space for vending machines. The rental income agreed upon is 10 percent of the sales generated from the machines, with the estimated total rental income payable in advance. Received estimated cash payment for June, $150.
3 Received bill from Quick Printing for promotional handouts, $540
(Advertising Expense).
3 Signed a contract for leasing sailboats from K. Einstein Boat Co. and paid
rental fee for June, $700.
5 Paid cash for miscellaneous expenses, $104.
8 Received $2,855 in cash as income for the use of the boats.
9 Bought an addition for the fan system on account from Stark Pool Supply,
$745.
15 Paid wages to employees for the period ended June 14, $3,900.
16 Paid on account for promotional handouts already recorded on June 3, $540.
16 Cury withdrew cash for personal use, $2,500.
16 Bought additional sails from Canvas Products, Inc., $850; payment due in 30
days.
16 Received $6,850 in cash as income for the use of the boats.
19 Paid cash for miscellaneous expenses, $40.
20 Paid cash to Louis Manufacturing Co. as part payment on account, $1,300.
22 Received $8,260 in cash for the use of the boats.
23 Received a reduction in the outstanding bill from Louis Manufacturing Co.
for a boat received in damaged condition, $380.
24 Received and paid telephone bill, $324.
29 Paid wages for period June 15 through 28, $4,973.
30 Paid cash to Stark Pool Supply to apply on account, $475.
30 Received and paid electric bill, $345.
30 Paid cash as an installment payment on the mortgage, $1,848. Of this
amount, $497 represents a reduction in the principal and the remainder is interest.
30 Received and paid water bill, $590.
30 Bought additional boats from Riddle and Son for $5,320, paying $1,550
down, with the remainder due in 30 days.
30 Cury withdrew cash for personal use, $1,800.
30 Received $5,902 in cash as income for the use of the boats.
30 Sales from vending machines for the month amounted to $1,780. Ten
percent of $1,780 equals $178. Because you have already recorded $150 as
concessions income, list the additional $28 revenue earned from the vending
machine operator. (Cash was not received.)
Required
1. Journalize the transactions, starting on page 1 of the general journal.
2. Post the transactions to the ledger accounts.
3. Prepare a trial balance in the first two columns of the work sheet.
4. Complete the work sheet. Data for the adjustments are as follows:
a. Insurance expired during the month, $1,000.
b. Depreciation of pool structure for the month, $715.
c. Depreciation of fan system for the month, $260.
d. Depreciation of sailboats for the month, $900.
e. Wages accrued at June 30, $810.
5. Journalize adjusting entries.
6. Post adjusting entries to the ledger accounts.
7. Prepare the income statement.
8. Prepare the statement of owner’s equity.
9. Prepare the balance sheet.
10. Journalize closing entries.
11. Post closing entries to the ledger accounts.
12. Prepare a post-closing trial balance
Trial balance total $281858, net income $7143, post closing trial balance total $263341
Explanation / Answer
INCOME STATEMENT
VENDING COMM
178
BOAT SALES
23867
24045
EXPENSES
DISC
-380
INSURANCE
1000
DEPN
1875
INTEREST
1351
TELE
324
ELEC
345
WATER
590
WAGES
9683
MISC
144
LEASE RENT
700
ADVT
890
SAILS
850
-17072
NET INCOME
6973
BALANCE SHEET
$
$
$
FIXED ASSETS
COST ACC
DEP
NBV
LAND
37000
0
37000
BOATS
31120
900
30220
FANS
14045
260
13785
POOL
140000
715
139285
222165
1875
220290
CURRENT ASSETS
ACC REC
28
PREPAY
11000
BANK
22478
33506
TOTAL ASSETS
253796
CURRENT LIABILITIES
ACC PAY
7210
WAGES PAY
810
8020
LONG TERM MORTGAGE
155603
CAPITAL
95000
PROFIT
6973
DRAWINGS
4300
106273
269896
ACC PAY
0
7210
ADVT
890
0
PREPAY
11000
0
BANK
22478
0
ELEC
345
0
WATER
590
0
DIS REC
0
380
DRAWING
4300
0
WAGES
9683
0
BOAT SALES
0
23867
MISC
180
0
LEASE RENT
700
0
DEP/ ACC DEP
1875
1875
AR
1780
0
FAN
14045
0
LAND
37000
0
POOL
140000
0
BOAT
39170
0
MORTGAGE
0
154252
CAPITAL
0
95000
VEND COMM
178
0
TELEPHONE
324
0
284538
282584
INCOME STATEMENT
VENDING COMM
178
BOAT SALES
23867
24045
EXPENSES
DISC
-380
INSURANCE
1000
DEPN
1875
INTEREST
1351
TELE
324
ELEC
345
WATER
590
WAGES
9683
MISC
144
LEASE RENT
700
ADVT
890
SAILS
850
-17072
NET INCOME
6973
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