Denzel Brooks opens a Web consulting business called Venture Consultants and completes the following transactions in March.
March 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company.
2 Venture consultants prepaid $6,000 cash for six months' rent for an office.
3 The company made credit purchases of office equipment for $3,000 and office supplies for $1, 200. Payment is due within 10 days.
6 The company completed services for a client and immediately received $4,000 cash.
9 The company completed a $7,500 project for a client, who must pay within 30 days.
12 The company paid $4, 200 cash to settle the account payable created on March 3.
19 The company paid $5,000 cash for the premium on a 12-month insurance policy.
22 The company received $3500 cash as partial payment for the work completed on March
25 The company completed work for another client for $3820 on credit.
29 Brooks withdrew $5,100 cash from the company for personal use.
30 The company purchased $6,000 of additional office supplies on credit.
31 The company paid $500 cash for this month's utility bill.
Required:
1. Prepare general journal entries to record these transactions:
Part 2:
The following unadjusted trial balance is for Power and Demolition Company as of year-end for the April 30, 2015 fiscal year. The April 30, 2015 credit balance of the owner's equity account is $46,900, and the owner invested $40,000 cash in the company during 2015.
No. Account Title Debit Credit
101 Cash 7,000
126 Supplies 16,000
128 Pre-paid insurance 12,600
167 Equipment 200,000
168 Accumulated depreciation - equipment 14,000
201 Accounts payable 6,800
251 Long-term notes payable 30,000
301 Bonn, equity 86,900
302 Bonn, withdrawals 12,000
401 Demolition fees earned 187,000
623 Wage expense 41,400
633 Interest expense 3,300
640 Rent expense 13,200
683 Property tax expense 9,700
684 Repairs expense 4,700
690 Utilities expense 4,800
TOTALS $324,700 $324,700
Instructions:
a) Journalize the following adjusting entries as of fiscal year-end April 30, 2015.
b) Post the adjusting entries to an unadjusted trial balance and prepare the adjusted trial balance.
c) Create financial statements.
Adjustments:
1. The supplies available at the end of fiscal 2015 year are at a cost of $7,900.
2. The cost of expired insurance for the fiscal year is $10,600.
3. Annual depreciation on equipment is $7,000; no other depreciation adjustment was made in 2015.
4. The April utilities expense of $800 is not included in the adjusted trial balance, because the bill arrived after the trial balance was prepared. The $800 amount owed needs to be recorded..
5. The company's employees have earned $2000 of accrued wages in the fiscal year.
6. The rent expense not yet paid or recorded in the fiscal year is $3000.
7. Additional property taxes of $550 have been assessed for the fiscal year, but have not yet been paid or recorded in the accounts.
8. The $300 accrued interest for April has not yet been paid and reported.
Part 3:
The Warnerwood Company uses a perpetual inventory system. It entered the following purchases and sales transactions for March into the system:
Date Activities Units Acquired at Cost Cost per Unit Units Sold at Retail Price per unit
1-Mar Beginning inventory 100 50
5-Mar Purchase 400 55
9-Mar Sales 420 85
18-Mar Purchase 120 60
25-Mar Purchase 200 62
29-Mar Sales 160 95
Totals 820 580
Instructions:
Show all of your work in an Excel spreadsheet for the following tasks:
1. Compute the number of units available for sale.
2. Compute the number of units in ending inventory.
3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, and (c) weighted average. (Round the average cost per unit to 2 decimal places.)
4. Compute the gross profit earned by the company for each of the four costing methods. (Round the average cost per unit to 2 decimal places.)