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Chapter 2: Q1TIAT_2 (page 116)

Before you begin this assignment, review the Tying It All Together feature in the chapter. Part of the Fry鈥檚 Electronics, Inc.鈥檚 experience involves providing technical support to its customers. This includes in-home installations of electronics and also computer support at their retail store locations.

Requirements

2. Assume Fry鈥檚 Electronics, Inc.鈥檚 Modesto, California, location received $24,000 for an annual contract to provide computer support to the local city government. How would Fry鈥檚 Electronics record this transaction? What financial statement(s) would this transaction affect?

Short Answer

Expert verified

The business transaction is recorded and the financial statements affected will be the balance sheet.

Step by step solution

01

Recording the transaction

Journal Entries

Date

Particulars

Debit ($)

Credit ($)

Cash

$24,000

Unearned Revenue

$24,000

02

Financial Statement affected by the transaction

The major financial statement which is directly affected by this transaction will be as follows:

Balance Sheet: The cash received will increase the assets side of the balance sheet. The unearned revenue will increase the liabilities of the business.

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Most popular questions from this chapter

Question:Preparing financial statements from the trial balance and calculating the debt ratio

Preparing financial statements from the trial balance and calculating the debt ratio

Account Title Debit Credit

Office Supplies 1,400

Cash 32,000

Accounts Receivable 9,100

Prepaid Insurance 2,600

Equipment 24,000

Accounts Payable 3,400

Unearned Revenue 1,296

Notes Payable 34,000

Common Stock 20,000

Dividends 3,000

Salaries Expense 1,600

Rent Expense 700

Utilities Expense 100

Service Revenue 15,804

Total Balance \( 74,500 \) 74,500

Requirements 1. Prepare the income statement for the month ended July 31, 2018

Question:Preparing financial statements from the trial balance and calculating the debt ratio

Preparing financial statements from the trial balance and calculating the debt ratio

Account Title Debit Credit

Office Supplies 1,400

Cash 32,000

Accounts Receivable 9,100

Prepaid Insurance 2,600

Equipment 24,000

Accounts Payable 3,400

Unearned Revenue 1,296

Notes Payable 34,000

Common Stock 20,000

Dividends 3,000

Salaries Expense 1,600

Rent Expense 700

Utilities Expense 100

Service Revenue 15,804

Total Balance \( 74,500 \) 74,500

Requirements 2. Prepare the statement of retained earnings for the month ended July 31, 2018. The beginning balance of retained earnings was $0.

Question:Courtney Meehan has trouble keeping her debits and credits equal. During a recent month, Courtney made the following accounting errors:

a. In preparing the trial balance, Courtney omitted a \(5,000 Notes Payable. The debit to Cash was correct.

b. Courtney posted a \)1,000 Utilities Expense as \(100. The credit to Cash was correct.

c. In recording a \)600 payment on account, Courtney debited Furniture instead of Accounts Payable.

d. In journalizing a receipt of cash for service revenue, Courtney debited Cash for \(50 instead of the correct amount of \)500. The credit was correct.

e. Courtney recorded a \(210 purchase of office supplies on account by debiting Office Supplies for \)120 and crediting Accounts Payable for $120.

Requirements 1. For each of these errors, state whether total debits equal total credits on the trial balance.

Correcting errors in a trial balance

The trial balance of Love to Learn Child Caredoes not balance.

Account Title Debit Credit

Office Supplies 1,000

Cash 8,060

Accounts Receivable 8,700

Prepaid Insurance 1,700

Equipment 90,400

Accounts Payable 3,000

Notes Payable 45,000

Common Stock 54,000

Dividends 3,740

Service Revenue 16,300

Rent Expense 400

Salaries Expense 4,350

Total Balance \( 118,350 \) 118,300

The following errors are detected:

a. Cash is understated by \(1,800.

b. A \)3,800 debit to Accounts Receivable was posted as a credit.

c. A \(1,000 purchase of office supplies on account was neither journalized nor posted.

d. Equipment was incorrectly transferred from the ledger as \)90,400. It should have been transferred as \(82,500.

e. Salaries Expense is overstated by \)350.

f. A \(300 cash payment for advertising expense was neither journalized nor posted.

g. A \)160 cash dividend was incorrectly journalized as \(1,600.

h. Service Revenue was understated by \)4,000.

i. A 12-month insurance policy was posted as a $1,400 credit to Prepaid Insurance. Cash was posted correctly.

Prepare the corrected trial balance as of May 31, 2018. Journal entries are not required.

Question: The following transactions occurred for Wilke Technology Solutions:

May 1 The business received cash of \(105,000 and issued common stock to Zoe Wilke.

2 Purchased office supplies on account, \)550.

4 Paid \(57,000 cash for building and land. The building had a fair market value of \)45,000.

6 Performed services for customers and received cash, \(3,600.

9 Paid \)350 on accounts payable.

17 Performed services for customers on account, \(3,500.

19 Paid rent expense for the month, \)1,200.

20 Received \(1,500 from customers for services to be performed next month.

21 Paid \)900 for advertising in next month鈥檚 IT Technology magazine.

23 Received \(3,100 cash on account from a customer.

31 Incurred and paid salaries, \)1,700.

Analyzing and journalizing transactions

Journalize the transactions of Wilke Technology Solutions. Include an explanation with each journal entry. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Advertising; Land; Building; Accounts Payable; Unearned Revenue; Common Stock; Service Revenue; Rent Expense; and Salaries Expense
See all solutions

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