Question

In: Accounting

Record your answer in this format (here is an example where Clemons paid $175 to have...


Record your answer in this format (here is an example where Clemons paid $175 to have a machine repaired).

Please add a sentence or two of explanation when possible.

A: - 175 cash
L: ne
E: -175 retained earnings for repair expense

Clemons is a consulting company. It prepares monthly financial statements. The following are a sample of the transactions that occurred from May1 -August 1

1. May 1. Issued additional shares of stock for $40,000 cash.

2. May 1. Paid April's wages of $42,000.

3. May 15. Purchased 10 automobiles, paid $6,000 down and will pay $194,000 over the next 5 years

4. May 20. Hired a new salesperson and signed a contract to pay her $75,000 per year plus a commission based on sales

5. May 27. Paid $125 for repair work done on the copy machine.

6. May 28. Received $50,000 for consulting services performed in May.

7. May 29. Paid June's rent of $7,000.

8. May 30. Received the utility bill for May for $1,200. Clemons will pay the bill in June.

9. May 30. Record $2,000 of depreciation for May.

10. June 1. Borrowed $150,000 from the bank on a 3-year Note Payable with 8% interest.

11. June 6. Received $235,000 for services performed and billed in May.

12. June 12. Paid a $20,000 dividend to the shareholders.

13. June 23. Purchased $3,000 of office supplies on credit. The supply closet was empty at the end of May.

14. June 24. Ordered new office furniture for $40,000. The furniture will ship in July.

15. June 26. Received $100,000 for consulting services that will be performed in July.

16. June 28. Performed a $20,000 consulting job and billed the client. The client will pay for the services in July.

17. June 29. Hire a new employee and pay him his $3,000 July salary in advance.

18. June 30. Clemons pays $1,000 for interest on the note borrowed on June 1, and half of the principal.

19. June 30. $1,450 of supplies are on the shelf at the end of June. Record the adjusting entry.

20. June 30. Record the adjusting entry related to the May 29 entry.

21. July 1. Pay the $7,000 rent for July.

22. July 14. The office furniture ordered on June 24 arrives, along with an invoice.

23. July 18. Clemons pays $400 for fresh flowers for a sales presentation.

24. July 30. Clemons pays for the office furniture ordered on June 24

25. July 31. Record adjusting entry related to the June 26th transaction.

26. July 31. Record adjusting entry related to the June 29th transaction.

27. July 31. Record the adjusting entry related to the June 1 entry. Be sure to consider the payment on June 30.

28.July 31. Now $100 of supplies are on the shelf. Record the adjusting entry needed.

29. August 1. One shareholder sells her stock in Clemons to another shareholder for $15,000.

30. August 31, Clemons pays off the bank loan borrowed on June 1 along with interest due.

Solutions

Expert Solution

  1. May 1. Issued additional shares of stock for $40,000 cash.

A: 40,000 cash

L: Na

E: 40,000 Common stock

  1. May 1. Paid April's wages of $42,000.

A: -42,000 cash

L: Na

E: -42,000 retained earnings for wages expense

  1. May 15. Purchased 10 automobiles, paid $6,000 down and will pay $194,000 over the next 5 years

A: 200,000 automobiles

     -6,000 Cash

L: 194,000 Accounts payable

E: Na

  1. May 20. Hired a new salesperson and signed a contract to pay her $75,000 per year plus a commission based on sales

A: Na

L: Na

E: Na

[Because no transaction]

  1. May 27. Paid $125 for repair work done on the copy machine.

A: -125 cash

L: Na

E: -125 retained earnings for repair expense

  1. May 28. Received $50,000 for consulting services performed in May.

A: 50,000 cash

L: Na

E: 50,000 retained earnings for Service revenue

  1. May 29. Paid June's rent of $7,000.

A: -7,000 cash

      7,000 prepaid rent

L: Na

E: Na

  1. May 30. Received the utility bill for May for $1,200. Clemons will pay the bill in June.

A: Na

L: 1,200 Accounts payable

E: -1,200 retained earnings for Utilities expense

  1. May 30. Record $2,000 of depreciation for May.

A: -2,000 Accumulated depreciation

L: Na

E: -2,000 retained earnings for depreciation expense

  1. June 1. Borrowed $150,000 from the bank on a 3-year Note Payable with 8% interest.

A: 150,000 cash

L: 150,000 notes payable

E: Na

  1. June 6. Received $235,000 for services performed and billed in May.

A: 235,000 cash

     -235,000 Accounts receivable

L: Na

E: Na

  1. June 12. Paid a $20,000 dividend to the shareholders.

A: -20,000 cash

L: Na

E: -20,000 retained earnings for dividends

  1. June 23. Purchased $3,000 of office supplies on credit. The supply closet was empty at the end of May.

A: 3,000 office supplies

L: 3,000 Accounts payable

E: Na

  1. June 24. Ordered new office furniture for $40,000. The furniture will ship in July.

A: Na

L: Na

E: Na  

[Because no transaction]

  1. June 26. Received $100,000 for consulting services that will be performed in July.

A: 100,000 cash

L: 10,000 Unearned revenue

E: Na

  1. June 28. Performed a $20,000 consulting job and billed the client. The client will pay for the services in July.

A: 20,000 Accounts receivable

L: Na

E: 20,000 retained earnings for Service revenue

  1. June 29. Hire a new employee and pay him his $3,000 July salary in advance.

A: -3,000 Cash

    3,000 prepaid salaries

L: Na

E: Na

  1. June 30. Clemons pays $1,000 for interest on the note borrowed on June 1, and half of the principal.

A: -76,000 cash

L: -75,000 Notes payable

E: -1,000 retained earnings for interest expense

  1. June 30. $1,450 of supplies are on the shelf at the end of June. Record the adjusting entry.

A: -1,550 supplies

L: Na

E: -,1,550 retained earnings for supplies expense

[Supplies expense =3,000 purchased on June 13 – 1,450 Supplies on hand on June 30]

  1. June 30. Record the adjusting entry related to the May 29 entry.

A: -7,000 prepaid rent

L: Na

E: -7,000 retained earnings for rent expense

  1. July 1. Pay the $7,000 rent for July.

A: -7,000 Cash

L: Na

E: -7,000 retained earnings for rent expense

  1. July 14. The office furniture ordered on June 24 arrives, along with an invoice.

A: 40,000 office furniture

L: 40,000 accounts payable

E: Na

  1. July 18. Clemons pays $400 for fresh flowers for a sales presentation.

A: -400 cash

L: Na

E: -400 retained earnings for miscellaneous expense

  1. July 30. Clemons pays for the office furniture ordered on June 24

A: -40,000 cash

L: -40,000 Accounts payable

E: Na

  1. July 31. Record adjusting entry related to the June 26th transaction.

A: Na

L: -10,000 Unearned revenue

E: 10,000 retained earnings for service revenue

  1. July 31. Record adjusting entry related to the June 29th transaction.

A: -3,000 prepaid salaries

L: Na

E: -3,000 retained earnings for salaries expense

  1. July 31. Record the adjusting entry related to the June 1 entry. Be sure to consider the payment on June 30.

A: Na

L: 500 interest payable

E: -500 retained earnings for interest expense

[Interest expense = 75,000 x 8% x 1/12 = 500]

  1. July 31. Now $100 of supplies are on the shelf. Record the adjusting entry needed.

A: -1,450 office supplies

L: Na

E: -1,450 retained earnings for supplies expense

[Supplies expense = 1,550 supplies on June 30 – 100 supplies on July 31=1,450]

  1. August 1. One shareholder sells her stock in Clemons to another shareholder for $15,000.

A: Na

L: Na

E: Na

30. August 31, Clemons pays off the bank loan borrowed on June 1 along with interest due.

A: -76,000 Cash

L: -75,000 notes payable

E: -1,000 retained earnings for interest expense

[500 Accrued interest for July + Accrued interest expense for Aug. = 1,000 total interest expense]

Note:

A = Assets, L = Liabilities, E = Stockholders' equity and Na = Not applicable

ekkarill92 answered 1 year ago
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