2.18: Alternate problems

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Alternate problem A Speedy Laundry Company, Inc., entered into the following transactions in August 2010:

Aug. 1 Received cash for capital stock issued to owners, USD 400,000.

3 Paid rent for August on a building and laundry equipment rented, USD 3,000.

6 Performed laundry services for USD 2,000 cash.

8 Secured an order from a customer for laundry services of USD 7,000. The services are to be performed next month.

13 Performed laundry services for USD 6,300 on account for various customers.

15 Received and paid a bill for USD 430 for supplies used in operations.

23 Cash collected from customers on account, USD 2,600.

31 Paid USD 2,400 salaries to employees for August.

31 Received the electric and gas bill for August, USD 385, but did not pay it at this time.

31 Paid cash dividend, USD 1,000.

Prepare journal entries for these transactions in the general journal.

Alternate problem B The transactions listed below are those of Reliable Computer Repair, Inc., for April 2010:

Apr. 1 Cash of USD 500,000 was received for capital stock issued to the owners.

3 Rent was paid for April, USD 3,500.

6 Trucks were purchased for USD 56,000 cash.

7 Office equipment was purchased on account from Wagner Company for USD 76,800.

14 Salaries for first two weeks were paid, USD 12,000.

15 USD 28,000 was received for services performed.

18 An invoice was received from Roger's Gas Station for USD 400 for gas and oil used during April.

23 A note was arranged with the bank for USD 80,000. The cash was received, and a note promising to return the USD 80,000 on 2010 May 30, was signed.

29 Purchased trucks for USD 73,600 by signing a note.

30 Salaries for the remainder of April were paid, USD 14,400.

a. Prepare journal entries for these transactions.

b. Post the journal entries to T-accounts. Enter the account number in the Posting Reference column of the journal as you post each amount. Use the following account numbers:

Acct.
No.	Account Title
100	Cash
150	Trucks
172	Office equipment
200	Accounts payable
201	Notes payable
300	Capital stock
400	Service revenue
506	Gas and oil expense
507	Salaries expense
515	Rent expense

c. Prepare a trial balance as of 2010 April 30.

Alternate problem C Rapid Pick Up & Delivery, Inc., was organized 2010 January 1. Its chart of accounts is as follows:

Acct.
No.	Account title
100	Cash
103	Accounts receivable
150	Trucks
160	Office furniture
172	Office equipment
200	Accounts payable
201	Notes payable
300	Capital stock
310	Retained earnings
400	Service revenue
506	Gas and oil expense
507	Salaries expense
511	Utilities expense
512	Insurance expense
515	Rent expense
530	Repairs expense

Jan. 1 The company received USD 560,000 cash and USD 240,000 of office furniture in exchange for USD 800,000 of capital stock.

2 Paid garage rent for January, USD 6,000.

4 Purchased computers on account, USD 13,200.

6 Purchased delivery trucks for USD 280,000; payment was made by giving cash of USD 150,000 and a 30-day note for the remainder.

Jan 12 Purchased insurance for January on the delivery trucks. The cost of the policy, USD 800, was paid in cash.

15 Received and paid January utilities bills, USD 960.

15 Paid salaries for first half of January, USD 3,600.

17 Cash received for delivery services to date amounted to USD 1,800.

20 Received bill for gasoline purchased and used in January, USD 180.

23 Purchased delivery trucks for cash, USD 108,000.

25 Cash sales of delivery services were USD 2,880.

27 Purchased a copy machine on account, USD 3,600.

31 Paid salaries for last half of January, USD 4,800.

31 Sales of delivery services on account amounted to USD 11,400.

31 Paid for repairs to a delivery truck, USD 1,120.

a. Prepare general ledger accounts for all these accounts except Retained Earnings. The Retained Earnings account has a beginning balance of zero and maintains this balance throughout the period.

b. Journalize the transactions given for 2010 January in the general journal.

c. Post the journal entries to ledger accounts.

d. Prepare a trial balance as of 2010 January 31.

Alternate problem 4 The trial balance of California Tennis Center, Inc., at the end of the first 11 months of its fiscal year follows:

	CALIFORNIA TENNIS CENTER, INC.
		Trial Balance
		2010 November 30
Acct.
No.	Account Title	Debits	Credits
100	Cash	$71,180
103	Accounts Receivable	81,750
130	Land	60,000
200	Accounts Payable		$18,750
201	Notes Payable		15,000
300	Capital Stock		50,000
310	Retained Earnings, 2010 January 1		53,700
413	Membership and Lesson Revenue		202,500
505	Advertising Expense	21,000
507	Salaries Expense	66,000
511	Utilities Expense	2,100
515	Rent Expense	33,000
518	Supplies Expense	2,250
530	Repairs Expense	1,500
531	Entertainment Expense	870
540	Interest Expense	300
		$339,950	$339,950

Dec. 1 Paid building rent for December, USD 4,000.

2 Paid vendors on account, USD 18,000.

5 Purchased land for cash, USD 10,000.

7 Sold memberships on account for December, USD 27,000.

10 Paid the note payable of USD 15,000, plus interest of USD 150.

13 Cash collections from customers on account, USD 36,000.

19 Received a bill for repairs, USD 225.

24 Paid the December utilities bill, USD 180.

28 Received a bill for December advertising, USD 1,650.

29 Paid the equipment repair bill received on the 19th, USD 225.

30 Gave tennis lessons for cash, USD 4,500.

30 Paid salaries, USD 6,000.

30 Sales of memberships on account since December 7, USD 18,000 (for the month of December).

30 Costs paid in entertaining customers in December, USD 350.

30 Paid dividends of USD 1,500. (The Dividends account is No. 320.)

a. Open three-column general ledger accounts for each of the accounts in the trial balance. Place the word Balance in the explanation space and enter the date 2010 December 1, on this same line. Also open an account for Dividends, No. 320.

b. Prepare entries in the general journal for the transactions during December 2010.

c. Post the journal entries to ledger accounts.

d. Prepare a trial balance as of 2010 December 31.

Alternate problem E Bill Baxter prepared a trial balance for Special Party Rentals, Inc., a company that rents tables, chairs, and other party supplies. The trial balance did not balance. The trial balance he prepared was as follows:

		SPECIAL PARTY RENTALS, INC.
		Trial Balance
		2010 December 31
Acct.
No.		Account Title	Debits	Credits
100	Cash		$ 74,000
103	Accounts Receivable		50,800
170	Equipment		160,000
200	Accounts Payable			$ 34,000
300	Capital Stock			130,000
310	Retained Earnings			44,000
320	Dividends		16,000
400	Service Revenue			432,000
505	Advertising Expense		1,200
507	Salaries Expense		176,000
511	Utilities Expense		44,800
515	Rent Expense		64,000
			$ 586,800	$ 640,000

In trying to f ind out why the trial balance did not balance, Baxter discovered the following errors:

Equipment was understated (too low) by USD 12,000 because of an error in addition in determining the balance of that account in the ledger.

A credit of USD 4,800 to Accounts Receivable in the journal was not posted to the ledger account at all.

A debit of USD 16,000 for a semiannual dividend was posted as a credit to the Capital Stock account.

The balance of USD 12,000 in the Advertising Expense account was entered as USD 1,200 in the trial balance.

Miscellaneous Expense (Account No. 568), with a balance of USD 3,200, was omitted from the trial balance.

Prepare a corrected trial balance as of 2010 December 31. Also, write a description of the effect(s) of each error.

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