Question 1

Financial data for Safety Hire as of 30 June 2019 are:

Accounts receivable $ 63 000 Wages expense $ 75 000
Equipment hire income 170 000 Advertising expense 30 000
Accounts payable 40 000 Land 75 000
Michael Donato, Capital ? Hire equipment 180 000
Cash at bank 45 000 Loan payable 50 000
Mortgage payable 130 000 Electricity expense 18 000
Building 85 000 Telephone expense 7 500

 

Required:

Prepare an income statement for the month of June and a balance sheet in account format for Safety Hire as at 30 June 2019.

 

Question 2

On 1 July 2018 Nicole Andreou opened a beauty parlour. The following transactions occurred during the first month of operations (ignore GST).

Use the following account titles and numbers: Cash at Bank, 100; Accounts Receivable, 101;

Supplies, 102; Equipment, 103; Loan Payable, 200; Nicole Andreou, Capital, 300; Nicole Andreou, Drawings, 301; Revenue, 400; Rent Expense, 500; Advertising Expense, 501; Insurance Expense, 502; Telephone Expense, 503.

July 2  Andreou invested $120 000 in the business by depositing cash into a business cheque account with the Eastpac Bank.

2  Paid $1800 for the first month’s rent.

3  Purchased equipment by an online bank transfer for $32 000 and signing a commercial loan agreement for $38 000.

4  Purchased supplies for $8400.

6  Paid advertising expense of $890.

16  Recorded beauty services revenue for the first half of the month of $3250 in  cash and $620 on credit.

20  Paid insurance expense for July of $480 using an online bank transfer.

23  Received a $140 payment from customers who paid on credit in the first half of the month.

28  Andreou withdrew $560 cash for personal living expenses.                  

31 Recorded revenue for the second half of the month of $3680 in cash and $580  on credit.

31 Paid telephone account of $330 by electronic transfer.

 

Required:

  1. Prepare the general journal entries to record the above transactions.
  2. Post the entries from the general journal to the general ledger accounts (running balance format) and enter the posting references in the general journal.
  3. Prepare a trial balance as at 31 July 2018.

 

Question 3

The financial year for Drip Dry Cleaning Services ends on 30 June. Using the following information, make the necessary adjusting entries at year-end. Ignore GST. Ignore Narration.

 

  1. On 15 February, Danielle Drip’s business borrowed $16 000 from Northern Bank at 8% interest. The principal and interest are payable on 15 August.
  2. Drip Dry Cleaning Services purchased a 1-year insurance policy on 1 March of the current year for $660. A 3-year policy was purchased on 1 November of the previous year for $2700. Both purchases were recorded by debiting Prepaid Insurance.
  3. The business has two part-time employees who each earn $220 a day. They both worked the last 3 days in June for which they have not yet been paid.
  4. On 1 June, the Highup Hotel paid the business $2100 in advance for doing their dry cleaning for the next 3 months. This was recorded by a credit to Unearned Dry Cleaning Revenue.
  5. The supplies account had a $280 debit balance on 1 July. Supplies of $1560 were purchased during the year and $190 of supplies are on hand as at 30 June.

 

Required:

Prepare the necessary adjusting entries at 30 June. 

Date Accounts Ref Debit Credit

 

Question 4

The adjusted trial balance columns in the worksheet of Elliot Painting Services are as follows.

 

ELLIOT PAINTING SERVICES

Worksheet (Partial) for the year ended 30 June 2019

Account Adjusted trial balance Income statement Balance sheet
Debit Credit Debit Credit Debit Credit
Cash at Bank 1 230
Accounts Receivable 75 600
Prepaid Rent 1 800
Office Supplies 8 320
Equipment 160 000
Accum. Depr. Equip’t 25 000
Accounts Payable 54 000
Salaries Payable 8 760
Unearned Revenue 3 430
F. Elliot, Capital 101 500
F. Elliot, Drawings 22 000
Painting Revenue 219 650
Salaries Expense 106 000
Rent Expense 6 050
Depreciation Expense 8 040
Telephone Expense 4 020
Office Supplies Used 10 080
Sundry Expenses

 

 9 200
$412 340 $412 340
Profit for the period

 

Required:

  1. Complete the worksheet.
  2. Prepare the closing entries necessary at 30 June 2019, assuming that this date is the end of the entity’s accounting period.
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