AC1220 ACCOUNTING I
Lab 2.2
AC1220 Lab 2.2
Introduction
Jake’s Computer Repair Service was profitable in February 20x1 and continued to operate in March 20x1. The ending balances for assets, liabilities, and the capital account of Jake’s Computer Repair Service on February 28, 20x1 are listed here. These account balances are also the beginning balances for March 20x1.
Account
Balance
Debit
Credit
Cash
$7,760
Accounts Receivable
$1,630
Supplies
$260
Prepaid Advertising
$1,000
Equipment
$6,200
Accounts Payable
$490
Wages Payable
$30
Interest Payable
$120
Note Payable
$10,000
Unearned Revenue
$120
Capital, Jones
$6,090
Total
$16,850
$16,850
The following transactions occurred during March 20x1:
a. March 1, 20x1. Purchased supplies (on account): $640
b. March 4, 20x1. Service revenues for the first week of March: $1,420 (cash)
c. March 18, 20x1. Received cash from customers on accounts receivable: $1,600
d. March 25, 20x1. Paid interest expense on note payable: $120
e. March 31, 20x1. Service revenues for the rest of March: $5,680 ($5,000 cash, $680 on account)
f. March 31, 20x1. Paid rent: $500
g. March 31, 20x1. The cash payment for wages totaled $1,100. The journal entry includes debit to the wages payable account.
h. March 31, 20x1. Jake withdrew $2,000 in cash from the business for personal use.
Requirement 1
Journalize the transactions occurring during March, 20x1. The first transaction has been journalized and posted to the related ledger account.
DATE
REF
DEBIT
CREDIT
3/1/11
Supplies
$640
Accounts Payable
a
$640
To record purchase of supplies
a
3/4/x1
b
b
3/18/x1
c
c
3/25/x1
d
d
DATE
REF
DEBIT
CREDIT
3/31/x1
e
e
e
3/31/x1
f
f
3/31/x1
g
g
g
3/31/x1
h
h
Requirement 2
Post the journal entries made for March 31, 20x1, to the appropriate T-accounts. Use the journal entries for March 31 made in Requirement 2. All other entries have been posted.
CASH
ACCOUNTS RECEIVABLE
Bal.
$7,760
Bal.
$1,630
SUPPLIES
PREPAID ADVERTISING
Bal.
$260
Bal.
$1,000
Mar 1
$640
EQUIPMENT
Bal.
$6,200
ACCOUNTS PAYABLE
WAGES PAYABLE
Bal.
$490
Bal.
$30
Mar 1
$640
INTEREST PAYABLE
UNEARNED REVENUE
Mar 25
$120
Bal.
$120
Bal.
120
NOTES PAYBALE
Bal.
$10,000
CAPITAL, JONES
DRAWINGS, JONES
Bal.
$6,090
SERVICE REVENUES
WAGES EXPENSE
RENT EXPENSE
INTEREST EXPENSE
Requirement 3
Use the following unadjusted trial balance for Jake’s Computer Repair Service as on March 31, 20x1, to check the ending balances you computed for Requirement 2 above.
Account
Unadjusted Balance
Debit
Credit
Cash
$12,060
Accounts Receivable
$710
Supplies
$900
Prepaid Advertising
$1,.
1. AC1220 ACCOUNTING I
Lab 2.2
AC1220 Lab 2.2
Introduction
Jake’s Computer Repair Service was profitable in February
20x1 and continued to operate in March 20x1. The ending
balances for assets, liabilities, and the capital account of Jake’s
Computer Repair Service on February 28, 20x1 are listed here.
These account balances are also the beginning balances for
March 20x1.
Account
Balance
Debit
Credit
Cash
$7,760
Accounts Receivable
3. b. March 4, 20x1. Service revenues for the first week of March:
$1,420 (cash)
c. March 18, 20x1. Received cash from customers on accounts
receivable: $1,600
d. March 25, 20x1. Paid interest expense on note payable: $120
e. March 31, 20x1. Service revenues for the rest of March:
$5,680 ($5,000 cash, $680 on account)
f. March 31, 20x1. Paid rent: $500
g. March 31, 20x1. The cash payment for wages totaled $1,100.
The journal entry includes debit to the wages payable account.
h. March 31, 20x1. Jake withdrew $2,000 in cash from the
business for personal use.
Requirement 1
Journalize the transactions occurring during March, 20x1. The
first transaction has been journalized and posted to the related
ledger account.
DATE
REF
DEBIT
CREDIT
3/1/11
Supplies
$640
8. 3/31/x1
h
h
Requirement 2
Post the journal entries made for March 31, 20x1, to the
appropriate T-accounts. Use the journal entries for March 31
made in Requirement 2. All other entries have been posted.
CASH
ACCOUNTS RECEIVABLE
Bal.
$7,760
Bal.
$1,630
16. RENT EXPENSE
INTEREST EXPENSE
Requirement 3
Use the following unadjusted trial balance for Jake’s Computer
Repair Service as on March 31, 20x1, to check the ending
balances you computed for Requirement 2 above.
Account
18. $6,090
Withdrawal, Jones
$2,000
Service Revenue
$7,100
Wage Expense
$1,070
Rent Expense
$500
Utilities Expense
-
Advertising Expense
-
Interest Expense
-
Supplies Expense
-
Total
$24,440
$24,440
Jake makes adjusting entries for the following items:
· Supplies costing $100 remain on hand at March 31, 20x1.
· The balance on the prepaid advertising expense account is
$1,000 on March 31, 20x1. The amount represents five months
of advertising services. Jake must make an adjustment to
recognize advertising expense for March 20x1.
19. · The utilities bill is received. The amount is still due at month
end: $610.
· The unearned revenue balance was $120 as of March 1, 20x1.
Jake has since performed the required computer repair services
for the customer.
· An interest of $120 is accrued on the note payable for March
20x1. The amount is payable as of March 31, 20x1.
Use the accounting worksheet given on the following page to
make the necessary adjusting entries and to compute the
adjusted trial balance, income statement, and balance sheet
amounts. Key the adjustments by transaction letter.
Requirement 3, continued
JAKE’S COMPUTER REPAIR SERVICE
WORKSHEET
MONTH ENDED MARCH 20x1
Account
Trial Balance
Adjustments
Adjusted Trial Balance
Income Statement
Balance Sheet
Debit
Credit
Debit
Credit
Debit
Credit
26. Net Income
Requirement 4
Complete the following income statement and statement of
owner’s equity for Jake’s Computer Repair Service as of March
31, 20x1:
27. JAKE’S COMPUTER REPAIR SERVICE
INCOME STATEMENT
FOR THE MONTH ENDED MARCH 31, 20x1
Service Revenue:
Less Expenses:
Wages Expense
Supplies Expense
Utilities Expense
Rent Expense
Advertising Expense
Interest Expense
Total Expenses
28. Net Income
JAKE’S COMPUTER REPAIR SERVICE
STATEMENT OF OWNER’S EQUITY
FOR THE MONTH ENDED March 31, 20x1
Capital, Jones, January 1, 20x1
Add: Additional Capital Investment
Add: Net Income—Loss
Less: Drawings, Jones
Capital, Jones, January 31, 20x1
Requirement 5
a. Using the adjusted trial balance amounts computed in
Requirement 3, make the appropriate closing entries to close
revenues and expenses to the income summary account.
DATE
DEBIT
CREDIT
3/31/11
30. To close expenses to income summary account
b. Using the adjusted trial balance amounts computed in
Requirement 3, make the appropriate closing entries to close the
income summary account to Jones’s capital account.
DATE
DEBIT
CREDIT
3/31/11
To close income summary to capital account
Requirement 6
JAKE’S COMPUTER REPAIR SERVICE
BALANCE SHEET
March 31, 20x1
ASSETS
LIABILITIES
Cash
31. $12,060
Accounts Payable
$1,740
Accounts Receivable
710
Interest Payable
120
Supplies
100
Note Payable
10,000
Prepaid Advertising
800
Total Liabilities
11,860
Equipment
6,200
OWNER’S EQUITY
Capital, Jones
$8,010
Total Assets
$19,870
Total Liabilities & Owner’s Equity
$19,870
Refer to the balance sheet above, for Jake’s Computer Repair
Service at March 31, 20x1, and compute and briefly interpret
the current ratio for Jake’s Computer Repair Service for the
period then ended. Show all your work, including the formula
used!