ACCOUNTING I

1. 2.3. 4.5. 6.

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Issued to Jane 1,000 shares of capital stock in exchange for her investment of $200,000 cash. (4 points)Purchased land and a small building for $550,000, paying $150,000 cash and signing a note payable for the balance. The land was worth $240,000 and the building $310,000. (5 points)Purchased office equipment for $50,000 from Staples, Inc. Paid $18,000 cash and agreed to pay the balance within 60 days. (4 points) Purchased a motorcycle on credit for $3,500 to be used for making deliveries to customers and agreed to make payment to Spokes, Inc. within 10 days. (4 points)
Paid in full the account payable to Spokes, Inc. (4 points)Borrowed $40,000 from a bank and signed a note payable due in six months. (4 points)
Instructions:1. Record the above transactions in general journal form. (18 points) 2. Post the entries in the T accounts below. (12 points)

Problem 2: Recording adjusting entries (24 points)
Hollander Laboratory adjusts and closes its accounts at the end of each month. The trial balance on September 30, 2020, before adjustments is as follows:

CashAccounts ReceivablePrepaid RentOffice SuppliesMedical EquipmentAccumulated Depreciation: MedicalEquipmentAccounts PayableNotes PayableUnearned RevenueCapital StockRetained EarningsDividendsMedical RevenueSalaries ExpenseUtilities ExpenseInsurance ExpenseTotal $96,000
$18,200 27,000 5,000 1,200

21,800$6,000
3,000
8,000 14,000 18,000 16,000
1,00031,000

14,000 2,000 5,800

$96,000

The following information relates to month end adjustments:
(1) Office supplies consumed during September 30 amounted to $600.(2) The useful life of the medical equipment was estimated to be 10 years.(3) Many patients pay in advance for major medical procedures. Fees of $7,000 were earned during the month by performing procedures patients who had paid in advance.(4) Salaries earned by employees during the month but not yet recorded amounted to $2,500.(5) On September 1 Hollander Laboratory paid $5,000 for 2 month’s rent in advance.(6) Medical procedures performed during the month but not yet billed or recorded amounted to $8,600.
Instructions: Prepare the adjusting entries required at September 30. (4 points per entry)
Problem 3: Closing entries and preparing Financial Statements (46 points)
Funky Beat Studio provides music lessons to student musicians. Some students pay in advance for lessons; others are billed after lessons have been already provided and the amounts are credited to “Lessons revenue”. The advanced payments are credited to an account entitled “Unearned revenue”.
FUNKY BEAT STUDIO ADJUSTED TRIAL BALANCE DECEMBER 31, 2020

CashAccounts receivableUnexpired insurancePrepaid rentSheet music suppliesMusic EquipmentAccumulated depreciation: music equipmentAccounts payableNotes payableDividend payableInterest payableIncome taxes payableUnearned revenueCapital stockRetained earningsDividendsLessons revenueAdvertising expenseInsurance expenseRent expenseSheet music supplies expenseUtilities expenseDepreciation expense: music equipmentSalaries expenseInterest expenseIncome tax expenseTotal $322,000
$ 72,000 3,500 5,000 1,000 25 3,400 1,100
20,000 56,600
159,375
$ 20,800 2,100 3,200 6,000 450 180,000

1,000
7,400

4,400 16,500 780 5,000 33,000 27,500 25 13,845

$322,000

From the adjusted trial balance dated December 31, 2020, provided above, complete the following:
1. Prepare all the closing entries for the company. (12 points)

Prepare the Income Statement dated 31/12/20. (10 points)
Prepare a Statement of Retained Earnings dated 31/12/2020. (10 points)
Prepare the company’s Balance Sheet dated 31/12/2020. (14 points)