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Chapter 2: Q1TIAT_2 (page 116)

Before you begin this assignment, review the Tying It All Together feature in the chapter. Part of the Fry’s Electronics, Inc.’s experience involves providing technical support to its customers. This includes in-home installations of electronics and also computer support at their retail store locations.

Requirements

2. Assume Fry’s Electronics, Inc.’s Modesto, California, location received $24,000 for an annual contract to provide computer support to the local city government. How would Fry’s Electronics record this transaction? What financial statement(s) would this transaction affect?

Short Answer

Expert verified

The business transaction is recorded and the financial statements affected will be the balance sheet.

Step by step solution

01

Recording the transaction

Journal Entries

Date

Particulars

Debit ($)

Credit ($)

Cash

$24,000

Unearned Revenue

$24,000

02

Financial Statement affected by the transaction

The major financial statement which is directly affected by this transaction will be as follows:

Balance Sheet: The cash received will increase the assets side of the balance sheet. The unearned revenue will increase the liabilities of the business.

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Most popular questions from this chapter

Question:E2-21 Journalizing transactions from T-accounts In December 2018, the first five transactions of Abling’s Lawn Care Company have been posted to the T-accounts. Prepare the journal entries that served as the sources for the five transactions. Include an explanation for each entry

Cash

  1. 57,000 40,000 (3) 3,800 (5) (2) 800 (3) 40,000 Office Supplies Common Stock Building Equipment Accounts Payable 800 (2) 46,000 (4) (5) 3,800 Notes Payable 57,000 (1) (4) 46,000 40,000 (3) 3,800 (5) (2) 800 (3) 40,000 Office Supplies Common Stock Building Equipment Accounts Payable 800 (2) 46,000 (4) (5) 3,800 Notes Payable 57,000 (1)

What is the calculation for the debt ratio? Explain what the debt ratio evaluates.

EMB Consulting Services had the following transactions for the month of November. Journalize the transactions and include an explanation with each entry.

Nov. 1 The business received \(10,000 cash and issued common stock.

15 Purchased office supplies on account, \)400.

18 Paid advertising bill, \(150.

20 Received \)1,000 from customers for services rendered.

28 Cash dividends of $500 were paid to stockholders

Roy Akins was the accounting manager at Zelco, a tire manufacturer, and he played golf with Hugh Stallings, the CEO, who was something of a celebrity in the community. The CEO stood to earn a substantial bonus if Zelco increased net income by year-end. Roy was eager to get into Hugh’s elite social circle; he boasted to Hugh that he knew some accounting tricks that could increase company income by simply revising a few journal entries for rental payments on storage units. At the end of the year, Roy changed the debits from “rent expense” to “prepaid rent” on several entries. Later, Hugh got his bonus, and the deviations were never discovered.

Requirements 1. How did the change in the journal entries affect the net income of the company at year-end?

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

Terrence Murphy opened a law office on January 1, 2018. During the first month of operations, the business completed the following transactions:

Jan. 1 Murphy contributed \(78,000 cash to the business, Terrence Murphy, Attorney. The business issued common stock to Murphy.

3 Purchased office supplies, \)600, and furniture, \(1,700, on account.

4 Performed legal services for a client and received \)1,000 cash.

7 Purchased a building with a market value of \(130,000, and land with a market value of \)25,000. The business paid \(25,000 cash and signed a note payable to the bank for the remaining amount.

11 Prepared legal documents for a client on account, \)400.

15 Paid assistant’s semimonthly salary, \(1,120.

16 Paid for the office supplies purchased on January 3 on account.

18 Received \)2,700 cash for helping a client sell real estate.

19 Defended a client in court and billed the client for \(1,800.

25 Received a bill for utilities, \)600. The bill will be paid next month.

29 Received cash on account, \(1,500.

30 Paid \)1,200 cash for a 12-month insurance policy starting on February 1.

30 Paid assistant’s semimonthly salary, \(1,120.

31 Paid monthly rent expense, \)1,800.

31 Paid cash dividends of $2,200.

Requirements

2. Open the following four-column accounts including account numbers: Cash, 101; Accounts Receivable, 111; Office Supplies, 121; Prepaid Insurance, 131; Land, 141; Building, 151; Furniture, 161; Accounts Payable, 201; Utilities Payable, 211; Notes Payable, 221; Common Stock, 301; Dividends, 311; Service Revenue, 411; Salaries Expense, 511; Rent Expense, 521; and Utilities Expense, 531.
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