INSTRUCTIONS: PLEASE SELECT THE CORRECT ANSWER CHOICE Use the following balance
ID: 2787966 • Letter: I
Question
INSTRUCTIONS: PLEASE SELECT THE CORRECT ANSWER CHOICE
Use the following balance sheet information from Aggie Health and Fitness Centers’ month-end financial statements dated August 31, 2016 and open t-accounts for each balance sheet line item. Then use the enclosed TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal, Ledger, Worksheet and Financial Statements for the second month of operations. Use the Perpetual Inventory method as discussed in class for all sales of merchandise.
Aggie Health and Fitness Center
Balance Sheet
As of August 31, 2016
Assets: Liabilities:
Cash $4,500 Accounts Payable $2,900
Accounts Receivable 6,500 Salaries Payable 5,600
Inventory – Concessions 1,100 Interest Payable 1,375
Supplies 400 Unearned Revenue 500
Prepaid Insurance 4,400 Note Payable 330,000
Total Current Assets 16,900 Total Current Liabilities 340,375
Land 80,000 Stockholder’s Equity
Building 408,000 Common Stock 245,500
Equipment 67,200 Retained Earnings 3,563
Furniture and Fixtures 20,016 Total Liab. and SHE $589,438
Accumulated Depreciation (2,678)
Total Assets $589,438
Fiscal Year
Aggie Health and Fitness Center was established as a business in August 2016. Aggie Health and Fitness Center follows a fiscal year end of July 31.
Inventories
Inventories consist of concessions available for resale to members. These concessions consist of energy drinks, nutritional supplements, etc. Inventories are valued on a first-in, first-out basis, using the perpetual method. (Note: The Center plans to expand its inventory during September to include logo-based apparel.)
Prepaid Insurance
Aggie Health and Fitness Center carries property insurance through Good Hands Insurance Co. The Center purchased a 12 month policy on August 1, 2016 for $4,800.
Fixed Assets
Property and Equipment are stated on the basis of historical cost.
Land and Building: The Land and Building was a group purchase made on August 1, 2016. The total purchase price amounted to $488,000. On the date of purchase the land was appraised at $80,000 and the building was appraised at $408,000. The Health and Fitness Center paid $158,000 down and signed a $330,000, 12-month, 5% note for the balance. Depreciation on the building is computed using the straight-line basis with no salvage value. The life of the building is estimated to be 20 years.
Equipment and Furniture and Fixtures: All equipment and furniture and fixtures were purchased for cash on August 1, 2016. Both equipment and furniture and fixtures are depreciated using the straight-line method of depreciation. No salvage value is anticipated. The useful life of the equipment is 8 years. The useful life of the furniture and fixtures is 6 years.
The book values of these assets are presented below:
Land $80,000 $80,000
Building 408,000
Less: Accumulated Depr 1,700 406,300
Equipment 67,200
Less: Accumulated Depr 700 66,500
Furniture and Fixtures 20,016
Less: Accumulated Depr 278 19,738
Net Plant, Property, and Equipment $572,538
Unearned Revenue
The balance in the unearned revenue account is due to the sale of gift certificates redeemable for massage therapy.
Revenue Recognition
The Company recognizes service revenue upon providing services for customers. Sales revenue is recognized upon customer receipt of goods. Revenue for gift certificate sales is recognized at redemption. (Note: all memberships sold during the first month of operations were for one month only).
Instructions
Use the following TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal, Ledger, Worksheet and Financial Statements for the second month of operations for Aggie Health & Fitness Center (The Fitness Center). Use the Perpetual Inventory method as discussed in class for all sales of merchandise.
TRANSACTIONS:
TRANSACTION #
DATE
TRANSACTION DESCRIPTION
1
Sept 1
Purchased a 3-month advertising campaign to be broadcast on local radio stations during the months of September, October and November. Paid $1,500 in advance for this ad campaign.
2
Sept 1
Sold 160, twelve-month memberships to the Fitness Center for $420 each. All membership dues were collected in cash.
3
Sept 2
Purchased office supplies for $325 on an open account from Kelli’s Office Supplies. The Fitness Center has 30 days to pay for the supplies.
4
Sept 3
Purchased on account a total of 180 shirts with an embroidered Aggie Health and Fitness Center logo from C & C Creations at a price of $14 per shirt. These shirts are available for resale to customers.
5
Sept 4
Paid wages due to employees on August 31
6
Sept 5
Purchased flowers for the reception desk for $54 cash
7
Sept 6
Purchased concessions for $5,200 on account from Advocare Distributing, Inc. These concessions consist of energy drinks, nutritional supplements, etc., and are available for resale to customers
8
Sept 7
Provided 50 hours of personal training services to members. Fees are charged at a rate of $45 an hour. The total amount was billed to individual member’s accounts
9
Sept 10
Paid the total amounts due to Kelli’s Office Supplies for the Sept. 2 transaction and C&C Creations for the Sept. 3 transaction
10
Sept 12
Sold thirty-five shirts to a corporate member, Allen & Associates for $36 each. Collected $500 in cash and the balance is owed to the Fitness Center on account
11
Sept 13
The owners of the company invested an additional $18,000 into Aggie Health and Fitness Center in exchange for common stock
12
Sept 14
Gift certificates totaling $300 were redeemed for massage therapy performed
13
Sept 15
The concessions stand reported sales of merchandise for $5,400 for the first half of the month. The concessions that were sold had an original cost of $2,320. All of these transactions were billed directly to each member’s account
14
Sept 15
For the first half of September, provided 22 hours of massage therapy at a rate of $75/hour. Billed the individual members’ accounts for services provided
15
Sept 16
Received $6,775 for services previously billed to customer’s accounts
16
Sept 16
Paid wages and salaries of $4,700 to Aggie Health and Fitness Center employees
17
Sept 17
Purchased on account additional concessions for $2,100 from Advocare Distributing
18
Sept 20
Paid $5,680 on accounts payable
19
Sept 21
Collected the balance of what was owed on account from Allen & Associates for the Sept. 12 transaction
20
Sept 22
Sold forty-seven shirts to individual customers for $40 each. Collected 30% in cash, the balance is owed to Aggie Health and Fitness Center on account
21
Sept 23
Received a utility bill that totaled $535 for the month. It is due October 12
22
Sept 24
Sold a gift certificate for $100 cash. The gift certificate is valid for one year and is redeemable for a 60 -minute massage
23
Sept 26
Cash sales of shirts: 30 shirts sold at $40 each
24
Sept 27
Aggie Health and Fitness Center paid a dividend of $4,000 to its shareholders
25
Sept 28
Received $4,225 for services previously billed to customers’ accounts
26
Sept 29
Purchased additional equipment for $28,000; paid $5,000 in cash and signed a two year, 4% note for the balance
27
Sept 29
Fees for massage therapy for the last half of September totaled $4,900. All of these transactions were collected in cash. Fees for personal training given during the last half of September amounted to $7,200. Fifty percent of the personal training fees were collected in cash
28
Sept 30
Credit sales for concessions during the last half of September totaled $1,900.
Cash sales for concessions during the last half of September totaled $480.
Cost of the concessions sold during the last half of September was $1,015
ADDITIONAL INFORMATION:
1.Depreciation expense for the month of September should be calculated using the straight-line method.
2.At the end of the month, a physical count was taken of the Fitness Center’s inventories.
It revealed the following information:
a.Sixty of the shirts for resale were on hand at September 30.
b.Concession merchandise still on hand as of September amounted to $4,990.
3. Salaries earned by employees but unpaid on September 30 totaled $5,115.
4. Office Supplies still on hand on September totaled $100.
On the Financial Statements worksheet, in the Balance Sheet, the Total Assets ending balance is...
$703,831
$709,187
$623,831
$597,860
Please select the correct letter choice.
TRANSACTION #
DATE
TRANSACTION DESCRIPTION
1
Sept 1
Purchased a 3-month advertising campaign to be broadcast on local radio stations during the months of September, October and November. Paid $1,500 in advance for this ad campaign.
2
Sept 1
Sold 160, twelve-month memberships to the Fitness Center for $420 each. All membership dues were collected in cash.
3
Sept 2
Purchased office supplies for $325 on an open account from Kelli’s Office Supplies. The Fitness Center has 30 days to pay for the supplies.
4
Sept 3
Purchased on account a total of 180 shirts with an embroidered Aggie Health and Fitness Center logo from C & C Creations at a price of $14 per shirt. These shirts are available for resale to customers.
5
Sept 4
Paid wages due to employees on August 31
6
Sept 5
Purchased flowers for the reception desk for $54 cash
7
Sept 6
Purchased concessions for $5,200 on account from Advocare Distributing, Inc. These concessions consist of energy drinks, nutritional supplements, etc., and are available for resale to customers
8
Sept 7
Provided 50 hours of personal training services to members. Fees are charged at a rate of $45 an hour. The total amount was billed to individual member’s accounts
9
Sept 10
Paid the total amounts due to Kelli’s Office Supplies for the Sept. 2 transaction and C&C Creations for the Sept. 3 transaction
10
Sept 12
Sold thirty-five shirts to a corporate member, Allen & Associates for $36 each. Collected $500 in cash and the balance is owed to the Fitness Center on account
11
Sept 13
The owners of the company invested an additional $18,000 into Aggie Health and Fitness Center in exchange for common stock
12
Sept 14
Gift certificates totaling $300 were redeemed for massage therapy performed
13
Sept 15
The concessions stand reported sales of merchandise for $5,400 for the first half of the month. The concessions that were sold had an original cost of $2,320. All of these transactions were billed directly to each member’s account
14
Sept 15
For the first half of September, provided 22 hours of massage therapy at a rate of $75/hour. Billed the individual members’ accounts for services provided
15
Sept 16
Received $6,775 for services previously billed to customer’s accounts
16
Sept 16
Paid wages and salaries of $4,700 to Aggie Health and Fitness Center employees
17
Sept 17
Purchased on account additional concessions for $2,100 from Advocare Distributing
18
Sept 20
Paid $5,680 on accounts payable
19
Sept 21
Collected the balance of what was owed on account from Allen & Associates for the Sept. 12 transaction
20
Sept 22
Sold forty-seven shirts to individual customers for $40 each. Collected 30% in cash, the balance is owed to Aggie Health and Fitness Center on account
21
Sept 23
Received a utility bill that totaled $535 for the month. It is due October 12
22
Sept 24
Sold a gift certificate for $100 cash. The gift certificate is valid for one year and is redeemable for a 60 -minute massage
23
Sept 26
Cash sales of shirts: 30 shirts sold at $40 each
24
Sept 27
Aggie Health and Fitness Center paid a dividend of $4,000 to its shareholders
25
Sept 28
Received $4,225 for services previously billed to customers’ accounts
26
Sept 29
Purchased additional equipment for $28,000; paid $5,000 in cash and signed a two year, 4% note for the balance
27
Sept 29
Fees for massage therapy for the last half of September totaled $4,900. All of these transactions were collected in cash. Fees for personal training given during the last half of September amounted to $7,200. Fifty percent of the personal training fees were collected in cash
28
Sept 30
Credit sales for concessions during the last half of September totaled $1,900.
Cash sales for concessions during the last half of September totaled $480.
Cost of the concessions sold during the last half of September was $1,015
Explanation / Answer
ACCOUNT
TRIAL BALANCE DR
TRIAL BALANCE CR
ADJUSTMENTS DR
ADJUSTMENTS CR
ADJ TRIAL BAL DR
ADJ TRIAL BAL CR
AFTER CLOSING TB DR
AFTER CLOSING TB CR
CASH
62630
62630
62630
ACCOUNTS RECEIVABLES
13388
13388
13388
INVENTORY-SHIRTS
1188
108
1080
1080
INVENTORY-CONCESSIONS
3165
65
3100
3100
SUPPLIES
900
775
125
125
PREPAID INSURANCE
4400
400
4000
4000
PREPAID ADVERTSIING
2400
800
1600
1600
LAND
80000
80000
80000
BUILDING
408000
408000
408000
ACCUMULATED DEP-BUILDING
1700
1700
3400
3400
FURNITURE & FIXTURES
20016
20016
20016
ACCUMULATED DEP-FURNITURE & FIXTURES
278
278
556
556
EQUIPMENT
95200
95200
95200
ACCUMULATED DEP-EQUIPMENT
700
719
1419
1419
ACCOUNTS PAYABLE
3809
3809
3809
SALARIES PAYABLE
0
4089
4089
4089
INTEREST PAYABLE
1375
1413
2788
2788
UNEARNED AVENUE
55000
4550
50450
50450
NOTES PAYABLE-SHORT TERM
330000
330000
330000
NOTES PAYABLE-LONG TERM
23000
23000
23000
COMMON STOCK
259500
259500
259500
RETAINED EARNINGS
3563
3563
10128
DIVIDENDS
3000
3000
0
SALES REVENUE
10220
10220
0
SERVICE REVENUE
15115
4550
19665
0
COST OF GOODS SOLD
3947
3947
0
INSURANCE EXPENSE
0
400
400
0
ADERTISING EXP
0
800
800
0
SALARY AND WAGE EXP
5430
4089
9519
0
SUPPLIES EXP
0
775
775
0
MISCELLANEOUS EXP
77
77
0
UTILITIES EXP
519
519
0
DEPRECIATION EXP
0
2697
2697
0
INTEREST EXP
0
1413
1413
0
LOSS ON SHRINKAGE
0
0
173
173
0
TRIAL BAL TOTALS
704260
704260
14897
14897
712459
712459
689139
689139
INCOME STATEMENT
SALES REVENUE 10220
SERVICE REVENUE 19665
TOTAL REVENUE 29885
LESS COGS 3947
GROSS PROFIT 25938
LESS OPERATING EXP
INSURANCE EXP 400
ADVERTISING EXP 800
SALARY EXP 9519
SUPPLY EXP 775
MISCELLANEOUS EXP 77
UTILITIES EXP 519
DEPRECIATION EXP 2697 14787
INCOME FROM OPERATIONS 11151
LESS INTEREST EXP 1413
LOSS ON SHRINKAGE 173
NET INCOME 9565
STATEMENT OF STOCK HOLDERS EQUITY
BEGINING STOCK HOLDERS EQUITY 249063
NEW COMMON STOCK 14000
NET INCOME 9565
DIVIDENDS 3000
ENDING STOCK HOLDERS EQUITY 269628
BALANCE SHEET
CASH 62630
ACCOUNTS RECEIVABLE 13388
INVENTORY-SHIRTS 1080
INVENTORY-CONCESSIONS 3100
SUPPLIES 125
PREPAID INSURANCE 4000
PREPAID ADVERTISING 1600
TOTAL CURRENT ASEETS 85923
LAND 80000
BUILDING 408000
FURNITURE & FIXTURES 20016
EQUIPMENT 95200
LESS ACCUMULATED DEP 5375
TOTAL FIXED ASSETS 597841
TOTAL ASSETS 683764
ACCOUNTS PAAYBLE 3809
SALARIES PAYABLE 4089
INTEREST PAYABLE 2788
UNEARNED REVENUE 50450
NOTES PAYABLE -SHORT TERM 330000
TOTAL CURRENT LIABILITIES 391136
NOTES PAYABLE-LONG TERM 23000
TOTAL LONG TERM LAIBILITIES 23000
TOTAL LIABILITIES 414136
COMMON STOCK 259500
RETAINED EARNINGS 10128
TOTAL STOCKHOLDERS EQUITY 269628
TOTAL LAIBILITIES AND SHE 683764
ACCOUNT
TRIAL BALANCE DR
TRIAL BALANCE CR
ADJUSTMENTS DR
ADJUSTMENTS CR
ADJ TRIAL BAL DR
ADJ TRIAL BAL CR
AFTER CLOSING TB DR
AFTER CLOSING TB CR
CASH
62630
62630
62630
ACCOUNTS RECEIVABLES
13388
13388
13388
INVENTORY-SHIRTS
1188
108
1080
1080
INVENTORY-CONCESSIONS
3165
65
3100
3100
SUPPLIES
900
775
125
125
PREPAID INSURANCE
4400
400
4000
4000
PREPAID ADVERTSIING
2400
800
1600
1600
LAND
80000
80000
80000
BUILDING
408000
408000
408000
ACCUMULATED DEP-BUILDING
1700
1700
3400
3400
FURNITURE & FIXTURES
20016
20016
20016
ACCUMULATED DEP-FURNITURE & FIXTURES
278
278
556
556
EQUIPMENT
95200
95200
95200
ACCUMULATED DEP-EQUIPMENT
700
719
1419
1419
ACCOUNTS PAYABLE
3809
3809
3809
SALARIES PAYABLE
0
4089
4089
4089
INTEREST PAYABLE
1375
1413
2788
2788
UNEARNED AVENUE
55000
4550
50450
50450
NOTES PAYABLE-SHORT TERM
330000
330000
330000
NOTES PAYABLE-LONG TERM
23000
23000
23000
COMMON STOCK
259500
259500
259500
RETAINED EARNINGS
3563
3563
10128
DIVIDENDS
3000
3000
0
SALES REVENUE
10220
10220
0
SERVICE REVENUE
15115
4550
19665
0
COST OF GOODS SOLD
3947
3947
0
INSURANCE EXPENSE
0
400
400
0
ADERTISING EXP
0
800
800
0
SALARY AND WAGE EXP
5430
4089
9519
0
SUPPLIES EXP
0
775
775
0
MISCELLANEOUS EXP
77
77
0
UTILITIES EXP
519
519
0
DEPRECIATION EXP
0
2697
2697
0
INTEREST EXP
0
1413
1413
0
LOSS ON SHRINKAGE
0
0
173
173
0
TRIAL BAL TOTALS
704260
704260
14897
14897
712459
712459
689139
689139
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