Ac1220 2 Essay

Submitted By brofist24
Words: 955
Pages: 4

AC1220 Lab 2.2

Introduction
Jake’s Computer Repair Service was profitable in February 20x1 and continued to operate in March 20x1. The ending balances for assets, liabilities, and the capital account of Jake’s Computer Repair Service on February 28, 20x1 are listed here. These account balances are also the beginning balances for March 20x1.

The following transactions occurred during March 20x1:
a. March 1, 20x1. Purchased supplies (on account): $640
b. March 4, 20x1. Service revenues for the first week of March: $1,420 (cash)
c. March 18, 20x1. Received cash from customers on accounts receivable: $1,600
d. March 25, 20x1. Paid interest expense on note payable: $120
e. March 31, 20x1. Service revenues for the rest of March: $5,680 ($5,000 cash, $680 on account)
f. March 31, 20x1. Paid rent: $500
g. March 31, 20x1. The cash payment for wages totaled $1,100. The journal entry includes debit to the wages payable account.
h. March 31, 20x1. Jake withdrew $2,000 in cash from the business for personal use.

Requirement 1 Journalize the transactions occurring during March, 20x1. The first transaction has been journalized and posted to the related ledger account.

DATE

REF
DEBIT
CREDIT
3/1/11
Supplies

$640

Accounts Payable a $640

To record purchase of supplies a 3/4/x1
Cash
b
1420

Service revenue b 1420

3/18/x1
Account receivable c 1600

cash c 1600

3/25/x1
Interest expense d 120

Notes payable d 120

DATE

REF
DEBIT
CREDIT
3/31/x1
Accounts receivable e 680

cash e 5000

Service revenue e 5680

3/31/x1
Rent Expense f 500

cash f 500

3/31/x1
Wages expense g 1070

cash g 1100
1100

Wages payable g 30
1100

3/31/x1
Cash drawing jones h 2000

cash h 2000

Requirement 2
Post the journal entries made for March 31, 20x1, to the appropriate T-accounts. Use the journal entries for March 31 made in Requirement 2. All other entries have been posted.

CASH

ACCOUNTS RECEIVABLE
Bal.
$7,760

Bal.
$1,630

4300

(920)

710

12060

SUPPLIES

PREPAID ADVERTISING
Bal.
$260

Bal.
$1,000

Mar 1
$640

900

EQUIPMENT

Bal.
$6,200

ACCOUNTS PAYABLE

WAGES PAYABLE

Bal.
$490

Bal.
$30

Mar 1
$640

INTEREST PAYABLE

UNEARNED REVENUE
Mar 25
$120
Bal.
$120

Bal.
120

NOTES PAYBALE

Bal.
$10,000

CAPITAL, JONES

DRAWINGS, JONES

Bal.
$6,090

2000

2000

SERVICE REVENUES

WAGES EXPENSE

5680

1070

1420

1070

7100

RENT EXPENSE

INTEREST EXPENSE

500

120

Requirement 3
Use the following unadjusted trial balance for Jake’s Computer Repair Service as on March 31, 20x1, to check the ending balances you computed for Requirement 2 above.

Jake makes adjusting entries for the following items:
Supplies costing $100 remain on hand at March 31, 20x1.
The balance on the prepaid advertising expense account is $1,000 on March 31, 20x1. The amount represents five months of advertising services. Jake must make an adjustment to recognize advertising expense for March 20x1.
The utilities bill is received. The amount is still due at month end: $610.
The unearned revenue balance was $120 as of March 1, 20x1. Jake has since performed the required computer repair services for the customer.
An interest of $120 is accrued on the note payable for March 20x1. The amount is payable as of March 31, 20x1.

Use the accounting worksheet given on the following page to make the necessary adjusting entries and to compute the adjusted trial balance, income statement, and balance sheet amounts. Key the adjustments by transaction letter.
Requirement 3, continued JAKE’S COMPUTER REPAIR SERVICE
WORKSHEET
MONTH ENDED MARCH 20x1
Account
Trial Balance
Adjustments
Adjusted Trial Balance
Income Statement
Balance Sheet

Debit
Credit
Debit
Credit
Debit