Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 3: 1P (page 138)

Listed below are the transactions of Yasunari Kawabata, D.D.S., for the month of September.

Sep. 1

Kawabata begins practice as a dentist and invests \(20,000 cash

2

Purchases dental equipment on account from Green Jacket Co. for \)17,280

4

Pays rent for office space, \(680 for the month.

4

Employs a receptionist, Michael Bradley

5

Purchases dental supplies for cash, \)942

8

Receives cash of \(1,690 from patients for services performed

10

Pays miscellaneous office expenses, \)430.

14

Bills patients \(5,820 for services performed.

18

Pays Green Jacket Co. on account, \)3,600.

19

Withdraws \(3,000 cash from the business for personal use.

20

Receives \)980 from patients on account

25

Bills patients \(2,110 for services performed

30

Pays the following expenses in cash: salaries and wages \)1,800; miscellaneous office expenses \(85.

30

Dental supplies used during September, \)330.

Instructions

  1. Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Owner’s Capital, Service Revenue, Rent Expense, Office Expense, Salaries and Wages Expense, Supplies Expense, Depreciation Expense, and Income Summary. Allow 10 lines for the Cash and Income Summary accounts, and 5 lines for each of the other accounts needed. Record depreciation using a 5-year life on the equipment, the straight-line method, and no salvage value. Do not use a drawing account.
  2. Prepare a trial balance
  3. Prepare an income statement, a statement of owner’s equity, and an unclassified balance sheet.
  4. Close the ledger
  5. Prepare a post-closing trial balance.

Short Answer

Expert verified

Part a) and d) T – account ledger with closing balance in step 2

b) Trial balance total is $40,588

c) Net income determined by preparing an income statement is $6,007,

Statement of Owners' equity shows owner's capital on 30 September is$23,007

The balance sheet total is $36,687

e) The total of Post-closing trial balance is $36,975

Step by step solution

01

Meaning of Trial Balance

A worksheet used in bookkeeping is the trial balance. In this, each record’s balance is included to form aggregates for the credit and debit account columns that are always equal.

02

(a and d) Preparing beginning transaction in T-ledger account and also closing it.

Dr.

Cash

Cr.

Sep. 1

20,000

Sep. 4

680

8

1,690

5

942

20

980

10

430

18

3,600

19

3,000

30

1,800

30

85

30 Balance

12,133

Dr.

Account Receivable

Cr.

Sep. 14

5,820

Sep. 20

980

25

2,110

Balance 30

6,950

Dr.

Rent expense

Cr.

Sep. 4

680

Sep. 30

680

Dr.

Supplies

Cr.

Sep. 5

942

Sep. 30

330

Balance 30

612

Dr.

Office expense

Cr.

Sep. 10

430

Sep. 30

515

30

85

515

515

Dr.

Salaries and wages expense

Cr.

Sep. 30

1,800

Sep. 30

1,800

Dr.

Supplies expense

Cr.

Sep. 30

330

Sep. 30

330

Dr.

Equipment

Cr.

Sep. 2

17,280

Dr.

Owner’s capital

Cr.

Sep. 19

3,000

Sep. 1

20,000

30

6,007

Balance 30

23,007

Dr.

Account Payable

Cr.

Sep. 18

$3,600

Sep. 2

17,280

Balance 30

13,680

Dr.

Service Revenue

Cr.

Sep. 30

$9,620

Sep. 8

1,690

Sep. 14

5,820

25

2,110

9,620

9,620

Dr.

Accumulated Depreciation

Cr.

Sep. 30

288

Dr.

Depreciation

Cr.

Sep. 30

288

Sep. 30

288

Dr.

Income Summary

Cr.

Sep. 30

680

Sep. 30

9,620

30

515

30

1,800

30

330

30

288

30

6,007

9,620

9,620

03

(b) Preparing trial balance

Yasunari Kawabata, D.D. S

Trial Balance

Debit ($)

Credit ($)

Cash

$12,133

Account receivable

6,950

Supplies

612

Equipment

17,280

Accumulated Depreciation-Equipment

$288

Accounts payable

13,680

Owners Capital

17,000

Service Revenue

9,620

Rent expense

680

Office expense

515

Salaries and Wages expense

1,800

Supplies expense

330

Depreciation expense

288

Totals

$40,588

$40,588

04

(c) Preparing an income statement, a statement of owners’ equity, and an unclassified balance sheet.

Preparing Income Statement

Yasunari Kawabata, D.D. S

Income Statement

Service revenue

$9,620

Expenses:

Salaries and wages expenses $1,800

Rent expense 680

Supplies expense 330

Depreciation expense 288

Office expense 515

Total expenses

3,613

Net Income

$6,007

Preparing a statement of owners’ equity

Yasunari Kawabata, D.D. S

Statement of Owners’ Equity

Owners’ capital September 1

$20,000

Add: Net Income of September

6,007

26,007

Less: Withdrawal by owner

3,000

Owners’ capital September 30

$23,007

Preparing balance sheet

Yasunari Kawabata, D.D. S

Balance Sheet

Assets

Amount

$

Liabilities and owners’ Equity

Amount

$

Cash

$12,133

Accounts payable

$13,680

Account receivable

6,950

Owners Capital

23,007

Supplies

612

Equipment

17,280

Accumulated depreciation-Equipment

(288)

Total asset

$36,687

Liabilities and owners’ Equity

$36,687

05

Preparing a post-closing trial balance

Yasunari Kawabata, D.D.S

Post-Closing Trial balance

Debit ($)

Credit ($)

Cash

$12,133

Accounts receivable

6,950

Supplies

612

Equipment

17,280

Accumulated depreciation-equipment

$288

Accounts payable

13,680

Owners’ capital

23,007

Totals

$36,975

$36,975

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

E3-1 (L02) (Transaction Analysis—Service Company) Beverly Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred.April 2 Invested \(32,000 cash and equipment valued at \)14,000 in the business.2 Hired an administrative assistant at a salary of \(290 per week payable monthly.3 Purchased supplies on account \)700. (Debit an asset account.)7 Paid office rent of \(600 for the month.11 Completed a tax assignment and billed client \)1,100 for services rendered. (Use Service Revenue account.)12 Received \(3,200 advance on a management consulting engagement.17 Received cash of \)2,300 for services completed for Ferengi Co.21 Paid insurance expense \(110.30 Paid administrative assistant \)1,160 for the month.30 A count of supplies indicated that \(120 of supplies had been used.30 Purchased a new computer for \)6,100 with personal funds. (The computer will be used exclusively for business purposes.)InstructionsJournalize the transactions in the general journal. (Omit explanations.)

BE3-4 (L02,3) Using the data in BE3-3, journalize the entry on July 1 and the adjusting entry on December 31 for Zubin Insurance Co. Zubin uses the accounts Unearned Service Revenue and Service Revenue.

Rolling Hills Golf Inc. was organized on July 1, 2017. Quarterly financial statements are prepared. The unadjusted trial balance and adjusted trial balance on September 30 are shown below.

ROLLING HILLS GOLF INC.TRIAL BALANCESEPTEMBER 30, 2017


Unadjusted
Adjusted

Dr.

Cr.

Dr.

Cr.

Cash

\( 6,700

\) 6,700

Accounts Receivable

400

1,000

Prepaid Rent

1,800

900

Supplies

1,200

180

Equipment

15,000

15,000

Accumulated Depreciation—Equipment

\( 350

Notes Payable

\) 5,000

5,000

Accounts Payable

1,070

1,070

Salaries and Wages Payable

600

Interest Payable

50

Unearned Rent Revenue

1,000

800

Common Stock

14,000

14,000

Retained Earnings

0

0

Dividends

600

600

Service Revenue

14,100

14,700

Rent Revenue

700

900

Salaries and Wages Expense

8,800

9,400

Salaries and Wages Expense

900

1,800

Rent Expense

350

Depreciation Expense

1,020

Supplies Expense

470

Utilities Expenses

50

Interest Expense

\(35,870

\)35,870

\(37,470

\)37,470

Instructions

  1. Journalize the adjusting entries that were made.
  2. Prepare an income statement and a retained earnings statement for the 3 months ending September 30 and a classified balance sheet at September 30.
  3. Identify which accounts should be closed on September 30.
  4. If the note bears interest at 12%, how many months has it been outstanding?

E3-2 (L02) (Corrected Trial Balance) The following trial balance of Wanda Landowska Company does not balance. Yourreview of the ledger reveals the following. (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance,Accounts Payable, and Property Tax Expense were each understated \(100. (c) A transposition error was made in AccountsReceivable and Service Revenue; the correct balances for Accounts Receivable and Service Revenue are \)2,750 and \(6,690,respectively. (d) A debit posting to Advertising Expense of \)300 was omitted. (e) A \(1,500 cash drawing by the owner was debited to Owner’s Capital and credited to Cash.

WANDA LANDOWSKA COMPANYTRIAL BALANCEAPRIL 30, 2017

Debit (\)) Credit (\()Cash \) 4,800Accounts Receivable 2,570Prepaid Insurance 700Equipment \( 8,000Accounts Payable 4,500Property Taxes Payable 560Owner’s Capital 11,200Service Revenue 6,960Salaries and Wages Expense 4,200Advertising Expense 1,100Property Tax Expense 800

Total \)20,890 $24,500

Prepare a correct trial balance.

E3-3 (L02) (Corrected Trial Balance) The following trial balance of Blues Traveler Corporation does not balance.

BLUES TRAVELER CORPORATION

TRIAL BALANCE

APRIL 30, 2017
Debit Credit

Cash \( 5,912Accounts Receivable 5,240Supplies 2,967Equipment 6,100Accounts Payable \) 7,044Common Stock 8,000Retained Earnings 2,000Service Revenue 5,200Office Expense 4,320

Total \(24,539 \)22,244

An examination of the ledger shows these errors.1. Cash received from a customer on account was recorded (both debit and credit) as \(1,380 instead of \)1,830.2. The purchase on account of a computer costing \(3,200 was recorded as a debit to Office Expense and a credit to AccountsPayable.3. Services were performed on account for a client, \)2,250, for which Accounts Receivable was debited \(2,250 and ServiceRevenue was credited \)225.4. A payment of \(95 for telephone charges was entered as a debit to Office Expense and a debit to Cash.5. The Service Revenue account was totaled at \)5,200 instead of $5,280.InstructionsFrom this information prepare a corrected trial balance.
See all solutions

Recommended explanations on Business Studies Textbooks

Intermediate Accounting

Read Explanation

Organizational Behavior

Read Explanation

Strategic Direction

Read Explanation

Business Operations

Read Explanation

Change Management

Read Explanation

Human Resources

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free