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1. The Accounting Cycle - During the period (8pts): Following is a complete list of accounts and account balances that appear in the general ledger

1. The Accounting Cycle - During the period (8pts): Following is a complete list of accounts and account balances that appear in the general ledger as of December 31, 2019 for the Blue Box Travel Co. Assume all accounts have their normal debit or credit balance.

Account:

Amount:

Account:

Amount:

Cash

$ 108,540

Common Stock

$ 4,000

Accounts Receivable (A/R)

$ 83,120

Additional Paid-In Capital

$ 38,000

Prepaid Rent

$ 4,300

Retained Earnings

$ 326,770

Equipment

$ 525,000

Service Revenue

$0

Accumulated Depreciation-Equipment

$ 50,000

Wages Expense

$0

Accounts Payable (A/P)

$ 77,120

Interest Expense

$0

Deferred Revenue

$ 17,070

Depreciation Expense

$0

Interest Payable

$ 8,000

Rent Expense

$0

Notes Payable

$ 200,000

Utilities Expense

$0

The following transactions were identified during January 2020:

Date:

Transaction:

1/9

Received $18,400 in cash from customers on their accounts receivable.

1/13

Paid $22,950 in cash to creditors on accounts payable.

1/16

Provided $30,000 worth of services to customers. $5,000 was paid for in cash by customers, the remaining $25,000 was purchased by customers on account.

1/17

Received $18,000 cash in advance from customers for travel services to be provided in February.

1/25

Paid $1,425 in cash for utilities used in January.

1/28

Prepaid rent in advance for February 2020 in the amount of $4,300 in cash.

PART A (5pts): Record all of the above transactions that occurred during the period using journal entries. Make sure to use proper formatting for all entries, and to include the date of each entry and a brief description of each entry. Do not make any end of the period adjusting or closing entries.

PART B (3pts): After recording the above transactions, calculate the ending balance that would appear on the January 31, 2020 unadjusted trial balance for the following accounts. You must show your work, such as a formula or T-account used to arrive at your answer.

  1. Cash

  2. A/R

  3. A/P

2. The Accounting Cycle End of the period (7pts): The Rosebud Motel, Inc has prepared its unadjusted trial balance as of 12/31/2020 and is now ready to make its adjusting entries at the end of its annual accounting period. Assume all accounts have their normal debit or credit balance.

The following additional information was gathered at December 31, 2020, the end of the firms annual accounting period. Assume Rosebud Motel uses an annual accounting period and all adjustments and adjusting entries are made only at the end of each annual accounting period (i.e. AJEs are only made on December 31st). No adjusting entries have been made yet for the year ending December 31, 2020 related to the below items:

  1. On 1/1/2020, the beginning balance of the Supplies account was $3,940. During 2020, Rosebud Motel purchased $18,945 worth of additional supplies. A physical count of supplies indicates that there are only $5,180 worth of supplies remaining on hand as of 12/31/2020.

  2. On September 29th, 2020, a customer paid $3,200 in advance for four months (i.e. $800 per month) of extended stay at the motel to begin October 1, 2020 through January 31, 2021. Rosebud Motel records this as Deferred Revenue on 9/29 at the time the customer paid cash.

  3. Rosebud Motel purchased a building for $250,000 on October 1, 2013, which was recorded as Building. The building has $0 salvage value and has an estimated useful life of 25 years. Rosebud Motel uses the straight-line depreciation method to allocate the cost of the building evenly over its 25-year useful life.

  4. On May 1st, 2020, Rosebud Motel borrowed $48,000 from the local bank, signing a note payable. This note is due in 8 years and has an annual interest rate of 6.5%. Rosebud pays interest every April 30th and the first interest payment is due on April 30th, 2021.

  5. On January 1st, 2020, Rosebud Motel prepaid $72,000 in cash for a three-year insurance policy, covering the period of January 1st, 2020 December 31, 2023. The firm recorded this as Prepaid Insurance on 1/1/2020.

PART A: Record Adjusting Journal Entries (AJEs) 5pts: Record the AJEs related to the information above that Rosebud would make on 12/31/2020. Make sure to use proper formatting for all entries, and to include the date of each entry and a brief description of each entry. You must show all of your work on calculations to receive full credit.

PART B: Calculate adjusted Net Income for 2020 1pts: In its unadjusted trial balance, as of 12/31/2020, the total of all revenue account balances for the 2020 annual accounting period was $591,422 and the total of all expense account balances for the 2020 annual accounting period was $486,420. Calculate the amount of Net Income that Rosebud Motel would report on its Income Statement for the year ended December 31st, 2020. You must show all of your work on calculations to receive full credit.

PART C: Calculating Net Book Value 1pt: Calculate the net book value of the building that would be reported on the classified Balance Sheet as of 12/31/2020. You must show all of your work on calculations to receive full credit.

3. The End of the Accounting Cycle prepare the financial statements (7pts): The adjusted trial balance for Dunder-Miflin, Inc. as of March 31st, 2020 is given below:

Dunder-Miflin

Adjusted Trial Balance

As of 3/31/2020

Account:

DEBIT:

CREDIT:

Cash

$ 19,041

Accounts Receivable

$ 16,911

Prepaid Rent

$ 1,582

Short Term Investments

$ 4,044

Equipment

$ 35,500

Accumulated Depreciation - Equipment

$ 14,200

Land

$ 49,200

Goodwill

$ 60,840

Accounts Payable

$ 8,427

Wages Payable

$ 1,290

Interest Payable

$ 60

Notes Payable

$ 24,000

Common Stock

$ 2,400

Additional Paid In Capital

$ 29,444

Retained Earnings

$ 91,117

Service Revenue

$ 67,422

Investment Revenue

$ 53

Wages Expense

$ 41,375

Utilities Expense

$ 1,638

Interest Expense

$ 180

Depreciation Expense

$ 7,100

Rent Expense

$ 932

Dividends

$ 70

$ 238,413

$ 238,413

Using the adjusted trial balance provided above for Dunder-Miflin, prepare the following financial statements:

PART A (3pts): Income statement for the period ended March 31st, 2020.

PART B (4pts): Classified balance sheet as of March 31st, 2020. Assume no additional stock was issued during the period and $70 in dividends were declared and paid in cash during the period.

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