Question

October

1. S. Erickson invested $5 0,000 cash, a $16,000 pool equipment, and $12,000 of office equipment in the company.

2. The company paid $4,000 cash for five months’ rent.

3. The company purchased $1,620 of office supplies on credit from Todd’s Office Products.

5. The company paid $4,220 cash for one year’s premium on a property and liability insurance policy.

6. The company billed Deep End Co $4,800 for services performed in installing a new pool

8. The company paid $1,620 cash for the office supplies purchased from Todd’s Office Products on October 3.

10. The company hired Julie Kruit as a part-time assistant for $136 per day, as needed.

12. The company billed Deep End Co another $1,600 for services performed.

15. The company received $4,800 cash from Deep End Co as partial payment on its account.

17. The company paid $750 cash to repair pool equipment that was damaged when moving it.

20. The company paid $1,958 cash for advertisements published in the local newspaper.

22.The company received $1,600 cash from Deep End Co. on its account.

28. The company billed Happy Summer Corp $6,802 for consulting services performed.

31. The company paid $952 cash for Julie Kruit’s wages for seven days’ work.

31. S. Ericksonwithdrew $3,500 cash from the company for personal use.

November

1. The Company reimbursed S. Erickson in cash for business automobile mileage allowance (Ericksonlogged 1,500 miles at $0.32 per mile).

2. The company received $5,630 cash from Underground Inc. for consulting services performed.

5. The company purchased office supplies for $1,325 cash from Todd’s Office Products.

8. The company billedSlides R Us $7,568 for services performed.

13. The company agreed to perform future services for Henry’s Pool and Spa Co. No work has been performed.

18. The company received $2,802 cash from Happy Summer Corp as partial payment of the October 28 bill.

22. The company donated $450 cash to the United Way in the company’s name.

24. The company completed work and sent a bill for $4,800toHenry’s Pool and SpaCo.

25. The company sent another bill to Happy Summer Corp for the past-due amount of $ 4 000.

28. The company reimbursed S. Erickson in cash for business automobile mileage(1,300 miles at $0.32 per mile).

30. The company paid cash to Julie Kruit for 14 days’ work.

30. S. Erickson withdrew $1,500 cash from the company for personal use

December

2. Paid $1,200 cash to West Side Mall for Splashing Around’s share of mall advertising costs.

3. Paid $350 cash for minor repairs to the company’s pool equipment

4. Received $4,800 cash from Henry’s Pool and Spa Co. for the receivable from November.

10. Paid cash to Julie Kruit for six days of work at the rate of $136 per day.

14. Notified by Henry’s Pool and Spa Co. that Splashing Around’s bid of $ 10,000 on a proposed project has been accepted. Henry’s paid a $ 6,500 cash advance to Splashing Around

15. Purchased $1,400 of office supplies on credit from Todd’s Office Products.

16. Sent a reminder to Slides R Us to pay the fee for services recorded on November 8.

20. Completed a project for Underground Inc and received $6,545 cash.

22–26 Took the week off for the holidays.

28. Received $4,500 cash from Slides R Us on its receivable.

29. Reimbursed S. Erickson for business automobile mileage (500 miles at $0.32 per mile).

31. S.Erickson withdrew $ 2,500 cash from the company for personal use.

Adjusting Entries

The following additional facts are collected for use in making adjusting entries prior to preparing

financial statements for the company’s first three months:

a. The December 31 inventory count of office supplies shows $1800 still available.

b.Three months have expired since the 12-month insurance premium was paid in advance.

c. As of December 31, Julie Kruit has not been paid for four days of work at $136 per day.

d.The pool equipment, acquired on October 1, is expected to have a four-year life with no salvage value.

e. The office equipment, acquired on October 1, is expected to have a five-year life with no salvage value.

f.Three of the five months’ prepaid rent has expired

just the adjusting entries journalized.

Answer 1

Adjustment Entries

Adjusting Entry	General Journal	Debit	Credit
A	Supplies Expense (Purchases 1,620+1,325+1,400 - balance 1,800)	$2,545
	Office supplies		$2,545
	(To record supplies expenses
B	Insurance Expense (4,220 / 12 * 3 months)	$1,055
	Prepaid Insurance		$1,055
	(To record Insurance Expense for 3 months)
C	Salaries & Wages Expense	$544
	Salaries and Wages Payable		$544
	(To record salary outstanding for 4 days @ $136 per day)
D	Depreciation Expense ($4,000 * 3 / 12)	$1,000
	Accumulated Depreciation - Pool Equipment		$1,000
	(To record depreciation for 3 months)
	Annual Depreciation = Cost $16,000 / Useful life 4 = $4,000)
E	Depreciation Expense ($2,400 * 3 / 12)	$600
	Accumulated Depreciation - Office Equipment		$600
	(To record depreciation for 3 months)
	Annual Depreciation = Cost $12,000 / Useful life 5 = $2,400)
F	Rent Expense ($4,000 * 3 / 5)	$1,500
	Prepaid Rent		$1,500
	(To record Rent Expense for 3 months)

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