Student : M. Reed Assignment : Apply your Accounting Knowledge

Course: Accounting I Ch. 2 and 3

Instructions
1-journalize the transaction using a perpetual invetory system
2- enter the beginnig cash and capital balances and post the transactions.
3-prepare the income statement through gross profit for the month of april 2008

More instructions/specific instructions are posted below:

1.1 Journal Entries

Date	Accounts	Debit	Credit
January 2	Cash	36,000
	Knipper, capital		36,000
3	Supplies	500
	Furniture	2,600
	Accounts payable		3,100
4	Cash	1,500
	Service revenue		1,500
7	Land	22,000
	Cash		22,000
11	Accounts receivable	900
	Service revenue		900
15	Salary expense	570
	Cash		570
16	Accounts payable	2,600
	Cash		26,000
18	Cash	1,800
	Service revenue		1,800
19	Accounts receivable	800
	Service revenue		800
29	Cash	400
	Accounts receivable		400
31	Salary expense	570
	Rent expense	700
	Knipper, Withdrawals	2,200
	Cash		3,470

1.2 T-accounts

Knipper, capital Cash

	$ 36,000		$ 36,000	$ 22,000
			1,500 1,800 400	570 2,600 3,470

$ 11,060

Supplies Furniture

$ 500

$ 2,600

Accounts payable Service revenue

$ 2,600

$ 3,100

$ 1,500 900 1,800 800

$ 500 $ 5,000

Land Accounts receivable

$ 22,000

$ 900 800

$ 400

$ 1,300

Rent expense Knipper, withdrawals

$ 700

$ 2,200

Salary expense

$ 570 570

$ 1,140

1,3 Trial balance

Laura Knipper, Attorney

Trial Balance

January 31, 2007

	Trial Balance
Account	Debit	Credit
Cash	$ 11,060
Accounts receivable	1,300
Supplies	500
Furniture	2,600
Land	22,000
Accounts payable		$ 500
Kni[[er, capital		36,000
Kni[[er, withdrawals	2,200
Service revenue		5,000
Salary Expense	1,140
Rent expense	700
Total	$ 41,500	$ 41,500

2.1 Trial Balance Worksheet

Hummer Limo Service

Trial Balance Worksheet

October 31, 2007

	Trial Balance			Adjustments			Adjusted Trial Balance
Account	Debit	Credit		Debit	Credit		Debit	Credit
Cash	6,300						6,300
Accounts receivable	1,000		a.	2,000			3,000
Prepaid rent	3,000		b.		600		2,400
Supplies	600		c.		400		200
Automobiles	72,000						72,000
Accumulated Depreciation		3,000	d.		1,000			4,000
Accounts payable		2,800						2,800
Salary payable			e.		200			200
Ben Hummer, capital		73,000						73,000
Ben Hummer, Withdrawals	3,600						3,600
Service revenue		9,400	a.		2,000			11,400
Salary expense	1,400		e.	200			1,600
Rent expense			b.	600			600
Fuel expense	300						300
Depreciation expense			d.	1,000			1,000
Supplies expense			c.	400			400
Total	88,200	88,200		4,200	4,200		91,400	91,400

2.2 Income Statement

Hummer Limo Service

Income Statement

For the Month Ended October 31, 2007

Revenues
Service revenue		$ 11,400
Expenses
Salary expense	1,600
Rent expense	600
Fuel expense	300
Depreciation expense	1,000
Supplies expense	400
Total expenses	3,900	3,900
Net Income		7,500

2.3 Statement of Changes in Equity

Hummer Limo Service

Statement of Changes in Owner’s Equity

For the Month Ended October 31, 2007

Ben Hummer capital, beginning $ 73,000

Add: Net Income 7,500

80,500

Less: Ben Hummer, Withdrawals (3,600)

Ben Hummer capital, ending $ 76,900

2.4 balance Sheet

Hummer Limo Service

Balance Sheet

October 31, 2007

Assets		Liabilities
Cash	$ 6,300	Accounts payable	$ 2,800
Accounts receivable	3,000	Salary payable	200
Prepaid rent	2,400	Total Liabilities	3,000
Supplies	200	Ben Hummer, capital	76,900
Automobile $ 72,000
Less: Accumulated depreciation (4,000)	68,000
Total Assets	79,900	Total Liabilities and Owner’s Equity	79,900

Instructions

The Given:
Cornerstone distributing company, a single proprietary business of Mr. Owner completed the following merchandising transactions in the month of July 2008, its first month of operation.

In the morning of July 1st , Mr. Owner made a cash deposit of $9,000 for the business capital. On the same day, there was a purchased merchandise on account from DAKOTA SUPPLY CO, $6900 , TERMS /0 , N/30.

In the afternoon of July first, a supplies amounting to $600 was purchased on cash.

July 4th sold merchandise on account $5500 , FOB destination , terms 1/10, , n/30. the cost of the merchandise sold was $4100.

July 5 $240 freight on July 4 sale

July 6 received credit from dakota suplly co merchandise returned $500

July 11 paid dakota supply co in full less discount

July 13 received collections in full , less discounts from customers billed om July4th

July 14 purchased merchandise for cash $3800

July16 received refund from supplier for returned goods on cash ourchase of July 14 $500

July 18 purchased merchandise from skywalker distributors $4500, FOB shipping point terms 2/10, n/30

July 20
paid freight on July 8 purchase $100

July23 sold merchandise for cash $6400 , the merchandise sold had a cost of $5,120

July 26 purchase merchandise for cash $2,300

July 29 made refunds to cash customers for defective merchandise $90. the returned merchandise has a scrap value of $30

July30 sold merchandise on account $3700 terms n/30 the cost of the merchandise sold was $2800

Notes:
a. The supplies at the end of the month amounted to $200
b. Portion of the 2-month advance rental payments of $1,000 was consumed.