ACCT504 - Case 1 - Part A and B

Case Study 1 (Part A)

P2-69B

(Learning Objectives 4, 5, 6: Analyze the impact of business transactions on accounts; record (journalize and post) transactions in the books; construct and use a trial balance) During the first month of operations, Johnson Plumbing, Inc., completed the following transactions:

Mar 2	Johnson received $35,000 cash and issued common stock to the stockholders.
3	Purchased supplies, $200, and equipment, $3,200, on account.
4	Performed services for a client and received cash, $1,400.
7	Paid cash to acquire land, $24,000.
11	Performed services for a customer and billed the customer, $800. Johnson expects to collect within one month.
16	Paid for the equipment purchased March 3 on account.
17	Paid the telephone bill, $150.
18	Received partial payment from customer on account, $400.
22	Paid the water and electricity bills, $170.
29	Received $1,500 cash for repairing the pipes of a customer.
31	Paid employee salary, $1,800.
31	Declared and paid dividends of $2,100.

?Requirements (60 points)

• 1. Record each transaction in the journal. Key each transaction by date. Explanations are not required.
• 2. Post the transactions to the T-accounts, using transaction dates as posting references.
• 3. Prepare the trial balance of Johnson Plumbing, Inc., at March 31 of the current year.
• 4. The manager asks you how much in total resources the business has to work with, how much it owes, and whether March was profitable (and by how much).

Case Study 1 (Part B)

P3-77B

(Learning Objectives 3, 4: Adjust the accounts; construct the financial statements) Consider the unadjusted trial balance of Princess, Inc., at August 31, 2012, and the related month-end adjustment data.

Adjustment data at August 31, 2012, include the following:

• a. Accrued advertising revenue at August 31, $2,100.
• b. Prepaid rent expired during the month. The unadjusted prepaid balance of $2,100 relates to the period August 2012 through October 2012.
• c. Supplies used during August, $2,090.
• d. Depreciation on furniture for the month. The furniture’s expected useful life is three years.
• e. Accrued salary expense at August 31 for Monday, Tuesday, and Wednesday. The five-day weekly payroll is $5,100 and will be paid on Friday.

? Requirements (40 points)

• 1. UsingExhibit 3-9 as an example, prepare the adjusted trial balance of Princess, Inc., at August 31, 2012. Key each adjusting entry by letter.

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