practicalweek48-0809answers
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Answers Practical Problems week 48
Problem 1: Fulton Security Service (taken from mid-term test November !" !!8#
Fulton Security Service provides users and security personnel for athletic events and other functions. Here is
Fultons trial balance at the end of October:
Fulton Security Services Trial Balance October 31, 2008
Cash 26,600
ccounts receivable !","00
Supplies !,!20
#$uip%ent !&,600
ccounts payable !0,600
Share capital 20,000
'etained earnin(s 2!,!20
)ividends *,000
Security service revenue &6,000
+a(es epense -2,000
#lectricity epense -,200'ent epense 6,*00
!0,20 !0,20
$urin( /ove%ber 200", Fulton en(a(ed in the folloin( transactions:
! 'eceived cash fro% a custo%er billed last %onth, ",*00.
- 1ade a pay%ent on accounts payable, 6,200.
urchased supplies on credit, "60.
" 3illed a client for security services perfor%ed, *,*00.!0 1ade a rent pay%ent for /ove%ber, !,600.
!! 'eceived fro% custo%ers for security services perfor%ed, -,200.
!2 aid a(es to the security staff for the first half of /ove%ber, 2,"00.
!* Ordered e$uip%ent, !,600.
!& aid the current %onths electricity bill, "00.
! 'eceived and paid for the e$uip%ent ordered on /ove%ber !*, !,600.
!4 'eturned for full credit da%a(ed supplies purchased on /ove%ber , 2*0.
2! aid for the supplies purchased on /ove%ber less the return on /ove%ber !4, 620.
2- 3illed a custo%er for security services perfor%ed, -,600.
-0 aid a(es to the security staff for the second half of /ove%ber, 2,!00.
-0 aid a dividend of 2,000.
%uestion A
'ecord the transactions in 5ournal entries. se only the accounts in the trial balance. lease s7ip a line
beteen the entries.
%uestion &
#nter the October -! trial balance in the 89accounts.
%uestion '
ost the 5ournal entries to the 89accounts.
%uestion $
Close the 89accounts and prepare the trial balance as of /ove%ber -0, 200".
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%uestion A
)ate ccount )ebit Credit
! Cash ",*00
ccounts receivable ",*00
- ccounts payable 6,200
Cash 6,200
Supplies "60
ccounts payable "60
" ccounts receivable *,*00
Security services revenue *,*00
!0 'ent epense !,600
Cash !,600
!! Cash -,200
Security services revenue -,200
!2 +a(es epense 2,"00
Cash 2,"00
!* /o entry
!& #lectricity epense "00
Cash "00
! #$uip%ent !,600
Cash !,600
!4 ccounts payable 2*0
Supplies 2*0
2! ccounts payable 620
Cash 620
2- ccounts receivable -,600
Security services revenue -,600
-0 +a(es epense 2,!00
Cash 2,!00
-0 )ividends 2,000
Cash 2,000
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%uestion &'
Cash ccounts receivable Supplies
3 26,600
! ",*00
!! -,200
# 20,*"0
- 6,200
!0 !,600
!2 2,"00
!& "00! !,600
2! 620
-0 2,!00
-0 2.000
3 !","00
" *,*00
2- -,600
# !",*00
! ",*00 3 !,!20
"60
# !,*0
!4 2*0
#$uip%ent ccounts payable Share capital
3 !&,600! !,600
# !,200
- 6,200!4 2*0
2! 620
3 !0,600 "60
# *,*00
3 20,000
# 20,000
'etained earnin(s )ividends Security services revenue
3 2!,!20
# 2!,!20
3 *,000
-0 2,000
# 6,000
3 &6,000
" *,*00
!! -,200
2- -,600
# 6,200
+a(es epense #lectricity epense 'ent epense
3 -2,000
!2 2,"00
-0 2,!00
# -6,400
3 -,200
!& "00
# *,000
3 6,*00
!0 !,600
# ",000
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Problem Sun" ' and Sand 'om)any
Sun, C and Sand Companystarted its activities on ! Septe%ber 200. t trades in life style consu%er (oods.
8he co%pany uses the )er)etual inventory system. 8he chart of accounts is added as a separate appendi
at the end of the ea%. se only these accounts in your ansers. 8he co%panys classified balance sheet at
-0 Septe%ber 200 ; the end of its first %onth of operations ; is (iven belo.
Sun" ' and Sand 'om)any'lassified &alance S*eet at +! Se)tember !!,
Current ssets Current !iabilities
Cash -&,&&0 3an7
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%uestion A
Dive the 5ournal entries for the folloin( transactions of Sun, C and Sand Companyin October 200. lease
s7ip a line beteen the different 5ournal entries.
ournal Sun" ' and Sand 'om)any
No. Account $ebit 'redit
! nventory -,000
ccounts ayable -,000
E
Frei(ht n &0
Frei(ht n ayable &0
2 ccounts receivable ,&00
Sales ,&00
E
Cost of Doods Sold *,&00
nventory *,&00
E
Frei(ht Out #pense -&
Frei(ht Out ayable -&
- ccounts ayable -,000
Frei(ht n ayable &0
Cash -,0&0
* Cash ,-&0
Sales )iscount @ !&0
ccounts 'eceivable ,&00
& +a(es #pense !,!00
+a(es ayable !00
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Cash !,200
6 ccounts ayable 6,000
Cash 6,000
E
nterest #pense !00
Cash !00
'ent #pense !,000
repaid 'ent !,000
E
)epreciation #pense, Shop #$uip%ent 2&0
ccu%ulated )epreciation, Shop #$uip%ent 2&0
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%uestion &
repare a 1ultistep nco%e State%ent for Sun, C and Sand Companyfor October 200.
n addition to the infor%ation in $uestion , the folloin( details are available:
- nco%e ta rate *0
nyho, you %ust include in the inco%e state%ent the folloin( ite%s:
-net profit
- (ross profit
- net sales
- profit fro% operations
'om)any Sun" ' and Sand
/ultiste) 0ncome Statement for ctober !!,
Net Sales:
Dross Sales ,&00
!essSales )iscounts 9!&0
/et Sales ,-&0
'ost of 2oods Sold:
Cost of Doods Sold before Frei(ht n *,&00
Frei(ht n &0
Cost of Doods Sold 9*,&&0
Dross rofit 2,"00
)eratin3 5)enses:
Frei(ht Out #pense -&
'ent #pense !,000 +a(es #pense !,!00
)epreciation #pense 2&0
8otal Operatin( #penses 92,-"&
Profit from )erations *!&
t*er 6evenue and 5)enses
nterest #pense !00
9!00
Profit before 0ncome 7a5es -!&
0ncome 7a5es (4!# 9!26
Net Profit !"4
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