Question 1: You have just been hired as the staff accountant for Maximum Corporation. However, the accounting manager is unclear about your ability to determine where certain increases and decreases should be placed. Indicate in the columns below by placing a check-mark (√ ) in the appropriate column identified.
a. Office rent is increased.
b. Service Revenue is increased.
c. Prepaid Expense is reduced.
d. Cash is decreased.
e. Plant and machinery are increased.
f. Capital is increased.
g. Utility expense is increased.
h. Paid salary
i. Cash is increased.
j. Accounts Payable is decreased.
Question 2: For the following transactions shown below, you are required to
1) prepare the journal entries,
2) post the T-accounts, and
3) extract the trial balance.
1. Newbell Dry Cleaning Company opened its business bank account by depositing $60,000 on August 1.
2. Purchased supplies for $1,100 cash
3. Purchased dry cleaning equipment from Sears Corporation for $17,500, making a down payment of $7,500 cash. The remainder is placed on account.
4. Paid rent for the month in the amount of $4,125
5. Cash sales for the month were $9,250.
6. Paid salaries of $1,875 cash.
7. Paid Sears $2,500 cash on account.
8. The cost of supplies used for the month was $300.
9. On August 1, the company purchased insurance costing $12,000 (12 months).
10. Adjust the books to reflect insurance consumed for the month as $1,000.
Question 3: As the senior accountant for Great Wall, Inc., one of your responsibilities at month's end is to prepare the Adjusting Journal Entries (AJEs) for submission to the accounting manager. Prepare the AJEs based on the following information.
1. Of the total supplies purchased for $4,000, it was determined that $1,500 was used.
2. Prior insurance transactions show that at the time of purchase, insurance prepayment was $24,000 for the 24 months. Assume that $8,000 was consumed for the period under review.
3. Assume that $3,600 received as commission was credited to the unearned commission
account. It was determined that earned commission was deemed to be $1,200.
4. Unpaid salary was calculated as $5,000.
5. Unpaid utilities were determined as $1,600.