ACC 255 Comprehensive Problem 1 Part A

SCORE ACC 255 SPRING 2020 COVER SHEET FOR PART A COMPREHENSIVE PROBLEM 1 (CHAPTERS 1 3.A INSTRUCTIONS: Complete all reg your problem (stapled) by the due accepted for any reason te all requirements for the comprehensive problem and turn in the original of the due date & time specified by your professor. No late problems will be hould take pictures of your solution to check your answers with the solutions which will be provided on BbLearn REQUIREMENTS: Part A: (1) PREPARE JOURNAL ENTRIES (2) PREPARE ADJUSTING JOURNAL ENTRIES Part B Grading Points COMPREHENSIVE PROBLEM 1 HENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) Page 136 1 is to review and reinforce your understanding of the accounting ded in this comprehensive problem has been kept to a minimum so behoppen in actual practice without unnecessary redundancy or excessive time The surpose of Comprehensive Problem is to review ele The number of transactions included in this com that you can simulate what might happen requirements. BACKGROUND bars Sam and Ben started Sparkle Pool & Spa Services, Inc. Sparkle provides cleaning In October 2019, brothers Sam and Ben stor maintenance, and repairs for pools and spas. Clients include individual homees, Inc. Sparkle provides clea and health clubs Ben have hired you to perform the accounting and record-keeping for the business and expect your ccounting professional to be neat and properly formatted. You have established the following chart of accounts for Sparkle Pool & Spa Services, Inc.: ACCT # ACCOUNT TITLE ACCT # ACCOUNT TITLE 112 311 312 113 114 313 314 142 511 143 144 Cash Accounts Receivable Prepaid Insurance Supplies Truck Accumulated Depreciation-Truck Computers Accumulated Depreciation-Computers Notes Payable Accounts Payable Unearned Service Revenue Interest Payable Salaries & Wages Payable Income Taxes Payable 512 513 Common Stock Retained Earnings Dividends Income Summary Service Revenue Salaries & Wages Expense Advertising Expense Insurance Expense Utilities Expense Rent Expense Supplies Expense Legal Fees Expense Depreciation Expense Interest Expense Income Taxes Expense 211 514 212 213 515 516 214 215 216 517 520 530 540 USE THESE ACCOUNT TITLES FOR YOUR JOURNAL ENTRIESI! Y UN ERRORS: Refer to the page following the transactions for suggestions in case you make an error COMPREHENSIVE PROBLEM 1 PART A CHAP OBLEM 1 PART A (CHAPTERS 1, 3, 4) OMPREHENSIVE PROBLEM 1 REQUIREMENTS PART A: Page 137 Prepare journal entries to record the October 2016 be chart of accounts for the appropriate account title ber 2019 transactions listed on the following page (refer to sunt titles to use). Prepare a separate journal entry for appropriober 2010 wave a space after each entry! Check figure Total debite each transaction and leave a so counts and calculate the account balances. Prepare on OPTIONAL: Post the journal entries to the T-accounts.com unadjusted trial balance. Check figures: beck figures Cash balance a $26,155. Trial balance total debits al entries in the general journal based on the following information (all AJEs cre (2) Prepare adjusting journal entries in the dated October 31) useful life of 3 years, Record one month of deprediction (a) The computers and mobile devices have a The truck has a useful life of 5 years. Record one month of depreciation (c) There were $315 of supplies on hand at the end of the month. (d) Record insurance expired for one month. le Employees earn salaries & wages of $4,000 per week. Assuming a Monday - Friday work wages and salaries for October 28-31 14) By the end of October, one month of cleaning services has been performed for La Playa High School for which payment had been received in advance on October 24, (a) On October 31, Sparkle performed cleaning services for a local athletic Club. The client will be billed in November, $425. th) Annual interest on the note payable is 7%. Record accrued interest for October 6) Income taxes to accrue for October are estimated to be $490. Check figure: Total Debits = $6,090. OPTIONAL: Post the adjusting entries to the T-accounts and calculate the account balances Prepare an adjusted trial balance. Check figure: Total Debits = $91,100. MPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1. 3.45 Page 138 Transaction: Sparkle Pool & Spa Services, Inc. began business by began business by selling 40,000 shares of $i per value Oct. 1 common stock for $40.000 F150 truck for $33,000. Paid $9,000 down and signed a promissory note Purchased a Ford F150 truck for the remainder aper. The newspaper published all of the ads in Paid $250 to advertise in th October Paid $1,275 to rent an office and storage space for October Purchased supplies on account from Pool Supplies Superstore. $1.120 Purchased a two-year liability insurance policy for $1,800. Purchased computers and mobile computing devices on account, $3,780. Provided pool cleaning services for customers and received $4,300 cash. Paid employee salaries and wages for October 1 - 11 of $3,600. 16 Performed pool maintenance and cleaning services for local hotels. The services were provided on account, $11,500. 18 Received and paid an invoice for $850 from Legal Zoom for legal fees related to the set up of the corporation. Received $1,500 cash in advance from La Playa High School for five months of future cleaning Services to be performed on the high school's pool. Paid employee salaries, $4,000 for the payroll period ending Friday, October 25. Received $2,500 cash from one of the local hotels for payment on their account. Paid for the supplies previously purchased on October 7 from Pool Supplies Superstore, Performed remai formed repair services on a spa and received $750 cash from a customer. 30 Received utility bills Received utility bills, (water, electric, gas, etc.) for the month totaling $360, Bills will be paid in November Declared and paid cash dividends to the stockholders, $1,000. Page 139 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) DISCOVERY OF ERRORS If your TRIAL BALANCE doesn't balance: (1) (2) Determine the difference between the totals. Possible sources of the error: If difference is 10, 100, 1,000, etc., it may be the result of an addition error (b) Look for an omission of a dr, or cr. posting in the amount of the difference. (c) It difference is evenly divisible by 2. half of the difference may be the result of a dr. posted as a cr. or vice versa. (d) If difference evenly divisible by 9, it could be a Transposition error(erroneous arrangement of digits: e.. 542 instead of 452). slide error (entire number moved 1 or more spaces to right or left: e.g. 542 instead of 5,420) If error not found, retrace steps of accounting process beginning with the last and working backwards: (2) (3) (4) Double check trial balance column totals. Compare listings in trial balance with balance per T-account (also make sure items in dr. column have dr. balance: same for cr. items). Recalculate each balance in T-accounts. Trace postings in T-accounts back to journal, placing a check by each item, then look for unchecked items in the journal. Verify equality of dr, and cr. in journal by computing total of all debits and total of all credits. (5) Page 140 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) GENERAL JOURNAL DESCRIPTION DEBIT DATE CREDIT 2019 Page 141 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) GENERAL JOURNAL DESCRIPTION DEBIT DATE CREDIT 2019 COMPREHENSIVE PROBLEM EHENSIVE PROBLEM 1 PART A (CHAPTERS 1. 3.4) GENERAL JOURNAL Page 142 ACCOUNT TITLES DATE DEBIT ADJUSTING ENTRIES: CREDIT 2019 Page 143 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) GENERAL LEDGER T-ACCOUNTS Accounts Receivable #112 Prepaid Insurance 11113 Supplies #114 Truck #141 Accumulated Depreciation-Truck #142 Computers #143 Accumulated Depreciation-Computers #144 Page 144 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) #211 Accounts Payable Notes Payable Ungared Service Revenue #213 Interest Payable Selaries & Wages Payable #215 Income Taxes Payable #216 Common Stock #311 Retained Earnings #312 Dividends #313 Income Summary Page 145 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) GENERAL LEDGER T-ACCOUNTS Service Revenue #411 Salaries & Wages Expense 44511 . Advertising Expense #512 Insurance Expense 513 Utilities Expense #514 Rent Expense 515 Supplies Expense #516 Legal Fees Expense Depreciation Expense #520 530 Interest Expense #540 Income Taxes Expense Page 146 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) SPARKLE POOL & SPA SERVICES, INC. UNADJUSTED TRIAL BALANCE OCTOBER 31, 2019 ACCOUNT TITLES DEBIT CREDIT Cash Accounts Receivable Prepaid Insurance Supplies Truck Computers Notes Payable Accounts Payable Unearned Service Revenue Common Stock Dividends Service Revenue Salaries & Wages Expense Wages Expense Advertising Expense Utilities Expense Rent Expense Legal Fees Expense TOTALS Page 147 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) SPARKLE POOL & SPA SERVICES, INC. ADJUSTED TRIAL BALANCE OCTOBER 31, 2019 ACCOUNT TITLES DEBIT CREDIT Cash Accounts Receivable Prepaid Insurance Supplies Truck Accumulated Depreciation-Truck Computers Accumulated Depreciation--Computers Notes Payable Accounts Payable Unearned Service Revenue Interest Payable Salaries & Wages Payable Income Taxes Payable Common Stock Dividends Service Revenue Salaries & Wages Expense Advertising Expense Insurance Expense Utilities Expense Rent Expense Supplies Expense Legal Fees Expense Depreciation Expense Interest Expense Income Taxes Expense TOTALS SCORE ACC 255 SPRING 2020 COVER SHEET FOR PART A COMPREHENSIVE PROBLEM 1 (CHAPTERS 1 3.A INSTRUCTIONS: Complete all reg your problem (stapled) by the due accepted for any reason te all requirements for the comprehensive problem and turn in the original of the due date & time specified by your professor. No late problems will be hould take pictures of your solution to check your answers with the solutions which will be provided on BbLearn REQUIREMENTS: Part A: (1) PREPARE JOURNAL ENTRIES (2) PREPARE ADJUSTING JOURNAL ENTRIES Part B Grading Points COMPREHENSIVE PROBLEM 1 HENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) Page 136 1 is to review and reinforce your understanding of the accounting ded in this comprehensive problem has been kept to a minimum so behoppen in actual practice without unnecessary redundancy or excessive time The surpose of Comprehensive Problem is to review ele The number of transactions included in this com that you can simulate what might happen requirements. BACKGROUND bars Sam and Ben started Sparkle Pool & Spa Services, Inc. Sparkle provides cleaning In October 2019, brothers Sam and Ben stor maintenance, and repairs for pools and spas. Clients include individual homees, Inc. Sparkle provides clea and health clubs Ben have hired you to perform the accounting and record-keeping for the business and expect your ccounting professional to be neat and properly formatted. You have established the following chart of accounts for Sparkle Pool & Spa Services, Inc.: ACCT # ACCOUNT TITLE ACCT # ACCOUNT TITLE 112 311 312 113 114 313 314 142 511 143 144 Cash Accounts Receivable Prepaid Insurance Supplies Truck Accumulated Depreciation-Truck Computers Accumulated Depreciation-Computers Notes Payable Accounts Payable Unearned Service Revenue Interest Payable Salaries & Wages Payable Income Taxes Payable 512 513 Common Stock Retained Earnings Dividends Income Summary Service Revenue Salaries & Wages Expense Advertising Expense Insurance Expense Utilities Expense Rent Expense Supplies Expense Legal Fees Expense Depreciation Expense Interest Expense Income Taxes Expense 211 514 212 213 515 516 214 215 216 517 520 530 540 USE THESE ACCOUNT TITLES FOR YOUR JOURNAL ENTRIESI! Y UN ERRORS: Refer to the page following the transactions for suggestions in case you make an error COMPREHENSIVE PROBLEM 1 PART A CHAP OBLEM 1 PART A (CHAPTERS 1, 3, 4) OMPREHENSIVE PROBLEM 1 REQUIREMENTS PART A: Page 137 Prepare journal entries to record the October 2016 be chart of accounts for the appropriate account title ber 2019 transactions listed on the following page (refer to sunt titles to use). Prepare a separate journal entry for appropriober 2010 wave a space after each entry! Check figure Total debite each transaction and leave a so counts and calculate the account balances. Prepare on OPTIONAL: Post the journal entries to the T-accounts.com unadjusted trial balance. Check figures: beck figures Cash balance a $26,155. Trial balance total debits al entries in the general journal based on the following information (all AJEs cre (2) Prepare adjusting journal entries in the dated October 31) useful life of 3 years, Record one month of deprediction (a) The computers and mobile devices have a The truck has a useful life of 5 years. Record one month of depreciation (c) There were $315 of supplies on hand at the end of the month. (d) Record insurance expired for one month. le Employees earn salaries & wages of $4,000 per week. Assuming a Monday - Friday work wages and salaries for October 28-31 14) By the end of October, one month of cleaning services has been performed for La Playa High School for which payment had been received in advance on October 24, (a) On October 31, Sparkle performed cleaning services for a local athletic Club. The client will be billed in November, $425. th) Annual interest on the note payable is 7%. Record accrued interest for October 6) Income taxes to accrue for October are estimated to be $490. Check figure: Total Debits = $6,090. OPTIONAL: Post the adjusting entries to the T-accounts and calculate the account balances Prepare an adjusted trial balance. Check figure: Total Debits = $91,100. MPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1. 3.45 Page 138 Transaction: Sparkle Pool & Spa Services, Inc. began business by began business by selling 40,000 shares of $i per value Oct. 1 common stock for $40.000 F150 truck for $33,000. Paid $9,000 down and signed a promissory note Purchased a Ford F150 truck for the remainder aper. The newspaper published all of the ads in Paid $250 to advertise in th October Paid $1,275 to rent an office and storage space for October Purchased supplies on account from Pool Supplies Superstore. $1.120 Purchased a two-year liability insurance policy for $1,800. Purchased computers and mobile computing devices on account, $3,780. Provided pool cleaning services for customers and received $4,300 cash. Paid employee salaries and wages for October 1 - 11 of $3,600. 16 Performed pool maintenance and cleaning services for local hotels. The services were provided on account, $11,500. 18 Received and paid an invoice for $850 from Legal Zoom for legal fees related to the set up of the corporation. Received $1,500 cash in advance from La Playa High School for five months of future cleaning Services to be performed on the high school's pool. Paid employee salaries, $4,000 for the payroll period ending Friday, October 25. Received $2,500 cash from one of the local hotels for payment on their account. Paid for the supplies previously purchased on October 7 from Pool Supplies Superstore, Performed remai formed repair services on a spa and received $750 cash from a customer. 30 Received utility bills Received utility bills, (water, electric, gas, etc.) for the month totaling $360, Bills will be paid in November Declared and paid cash dividends to the stockholders, $1,000. Page 139 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) DISCOVERY OF ERRORS If your TRIAL BALANCE doesn't balance: (1) (2) Determine the difference between the totals. Possible sources of the error: If difference is 10, 100, 1,000, etc., it may be the result of an addition error (b) Look for an omission of a dr, or cr. posting in the amount of the difference. (c) It difference is evenly divisible by 2. half of the difference may be the result of a dr. posted as a cr. or vice versa. (d) If difference evenly divisible by 9, it could be a Transposition error(erroneous arrangement of digits: e.. 542 instead of 452). slide error (entire number moved 1 or more spaces to right or left: e.g. 542 instead of 5,420) If error not found, retrace steps of accounting process beginning with the last and working backwards: (2) (3) (4) Double check trial balance column totals. Compare listings in trial balance with balance per T-account (also make sure items in dr. column have dr. balance: same for cr. items). Recalculate each balance in T-accounts. Trace postings in T-accounts back to journal, placing a check by each item, then look for unchecked items in the journal. Verify equality of dr, and cr. in journal by computing total of all debits and total of all credits. (5) Page 140 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) GENERAL JOURNAL DESCRIPTION DEBIT DATE CREDIT 2019 Page 141 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) GENERAL JOURNAL DESCRIPTION DEBIT DATE CREDIT 2019 COMPREHENSIVE PROBLEM EHENSIVE PROBLEM 1 PART A (CHAPTERS 1. 3.4) GENERAL JOURNAL Page 142 ACCOUNT TITLES DATE DEBIT ADJUSTING ENTRIES: CREDIT 2019 Page 143 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) GENERAL LEDGER T-ACCOUNTS Accounts Receivable #112 Prepaid Insurance 11113 Supplies #114 Truck #141 Accumulated Depreciation-Truck #142 Computers #143 Accumulated Depreciation-Computers #144 Page 144 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) #211 Accounts Payable Notes Payable Ungared Service Revenue #213 Interest Payable Selaries & Wages Payable #215 Income Taxes Payable #216 Common Stock #311 Retained Earnings #312 Dividends #313 Income Summary Page 145 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) GENERAL LEDGER T-ACCOUNTS Service Revenue #411 Salaries & Wages Expense 44511 . Advertising Expense #512 Insurance Expense 513 Utilities Expense #514 Rent Expense 515 Supplies Expense #516 Legal Fees Expense Depreciation Expense #520 530 Interest Expense #540 Income Taxes Expense Page 146 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) SPARKLE POOL & SPA SERVICES, INC. UNADJUSTED TRIAL BALANCE OCTOBER 31, 2019 ACCOUNT TITLES DEBIT CREDIT Cash Accounts Receivable Prepaid Insurance Supplies Truck Computers Notes Payable Accounts Payable Unearned Service Revenue Common Stock Dividends Service Revenue Salaries & Wages Expense Wages Expense Advertising Expense Utilities Expense Rent Expense Legal Fees Expense TOTALS Page 147 COMPREHENSIVE PROBLEM 1 PART A (CHAPTERS 1, 3, 4) SPARKLE POOL & SPA SERVICES, INC. ADJUSTED TRIAL BALANCE OCTOBER 31, 2019 ACCOUNT TITLES DEBIT CREDIT Cash Accounts Receivable Prepaid Insurance Supplies Truck Accumulated Depreciation-Truck Computers Accumulated Depreciation--Computers Notes Payable Accounts Payable Unearned Service Revenue Interest Payable Salaries & Wages Payable Income Taxes Payable Common Stock Dividends Service Revenue Salaries & Wages Expense Advertising Expense Insurance Expense Utilities Expense Rent Expense Supplies Expense Legal Fees Expense Depreciation Expense Interest Expense Income Taxes Expense TOTALS