Assessing Financial Statement Effects of Transactions DeFond Services, a firm providing art services for advertisers, began business on June 1. The following accounts are needed to record the transactions for June: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Common Stock; Dividends; Service Fees Earned; Rent Expense; Utilities Expense; and Wages Expense. Record the following transactions for June using the financial statement effects template. (Record each transaction in the order it appears.)

June	1	M. DeFond invested $12,000 cash to begin the business in exchange for common stock.
	2	Paid $950 cash for June rent.
	3	Purchased $6,400 of office equipment on credit.
	6	Purchased $3,800 of art materials and other supplies; the company paid $1,800 cash with the remainder due within 30 days.
	11	Billed clients $4,700 for services rendered.
	17	Collected $3,250 cash from clients on their accounts billed on June 11.
	19	Paid $3,000 cash toward the account for office equipment (see June 3).
	25	Paid $900 cash for dividends.
	30	Paid $350 cash for June utilities.
	30	Paid $2,500 cash for June wages.

	Balance Sheet
Transaction		Cash Asset	+	Noncash Assets	=	Liabilities	+	Contributed Capital	+	Earned Capital
June	1	Answer		Answer		Answer		Answer		Answer
	2	Answer		Answer		Answer		Answer		Answer
	3	Answer		Answer		Answer		Answer		Answer
	6	Answer		Answer		Answer		Answer		Answer
	11	Answer		Answer		Answer		Answer		Answer
	17	Answer		Answer		Answer		Answer		Answer
	19	Answer		Answer		Answer		Answer		Answer
	25	Answer		Answer		Answer		Answer		Answer
	30	Answer		Answer		Answer		Answer		Answer
	30	Answer		Answer		Answer		Answer		Answer

Income Statement
Revenue	-	Expenses	=	Net Income
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer

2.

Preparing Journal Entries and Posting DeFond Services, a firm providing art services for advertisers, began business on June 1. The following accounts are needed to record the transactions for June: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Common Stock; Dividends; Service Fees Earned; Rent Expense; Utilities Expense; and Wages Expense. Prepare a journal entry for each transaction.

June	1	M. DeFond invested $12,000 cash to begin the business in exchange for common stock.
	2	Paid $950 cash for June rent.
	3	Purchased $6,400 of office equipment on credit.
	6	Purchased $3,800 of art materials and other supplies; the company paid $1,800 cash with the remainder due within 30 days.
	11	Billed clients $4,700 for services rendered.
	17	Collected $3,250 cash from clients on their accounts billed on June 11.
	19	Paid $3,000 cash toward the account for office equipment (see June 3).
	25	Paid $900 cash for dividends.
	30	Paid $350 cash for June utilities.
	30	Paid $2,500 cash for June wages.

Prepare a journal entry for each transaction. (Record each transaction in the order it appears.)

GENERAL JOURNAL
Date	Description	Debit	Credit
June 1	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 2	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 3	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 6	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	Cash	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 11	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 17	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 19	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 25	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 30	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
June 30	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer
	AnswerCashAccounts ReceivableSuppliesOffice EquipmentAccounts PayableCommon StockDividendsService Fees EarnedRent ExpenseUtilities ExpenseWages Expense	Answer	Answer

Create a T-account for each account, and then post the journal entries to the T-accounts.

Enter transactions in the T-accounts in the order they appear.

Cash
	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer

Supplies
	Answer	Answer

Office Equipment
	Answer	Answer

Accounts Receivable
	Answer	Answer

Accounts Payable
	Answer	Answer
	Answer	Answer

Common Stock
	Answer	Answer

Dividends
	Answer	Answer

Rent Expense
	Answer	Answer

Utilities Expense
	Answer	Answer

Wages Expense
	Answer	Answer

Service Fees Earned
	Answer	Answer

3

Inferring Transactions from Financial Statements Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 582 locations across the U.S. as well as in Canada, the United Kingdom, Japan, Australia, South Korea, Taiwan, Mexico and Puerto Rico. As of its fiscal year-end 2010, Costco had approximately 60 million members. Selected fiscal-year information from the company's balance sheets follows. ($ millions).

Selected Balance Sheet Data ($ millions)	2010	2009
Merchandise inventories	$5,638	$5,405
Deferred membership income (liability)	869	824

(a) During fiscal 2010, Costco collected $1,736 cash for membership fees. Use the financial statement effects template to record the cash collected for membership fees. (b) In 2010, Costco recorded $67,995 million in merchandise costs (that is, cost of goods sold). Record this transaction in the financial statement effects template. (c) Determine the value of merchandise that Costco purchased during fiscal-year 2010. Use the financial statement effects template to record these merchandise purchases. Assume all of Costco's purchases are on credit.

Use negative signs with your answers, when appropriate. Enter answers in millions.

	Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contributed Capital	+	Earned Capital
(a)	Answer		Answer		Answer		Answer		Answer
(b)	Answer		Answer		Answer		Answer		Answer
(c)	Answer		Answer		Answer		Answer		Answer

Income Statement
Revenue	-	Expenses	=	Net Income
Answer		Answer		Answer
Answer		Answer		Answer
Answer		Answer		Answer

4.

Preparing Closing Journal Entries Selected financial information from General Mills as of May 29, 2016 follows.

$ millions	Debit	Credit
Net sales		$16,689.6
Cost of sales	$10,758.9
Selling, general, & administrative expense & other	3,098.4
Interest expense, net	329.1
Income tax expense	780.5
Retained earnings		12,041.4

Assume the company has not yet closed any accounts to retained earnings. Prepare journal entries to close the temporary accounts above. Set up the needed T-accounts, and post the closing entries. After these entries are posted, what is the balance of the retained earnings account (enter balance is T-account).

General Journal
Date	Description		Debit	Credit
26-May	AnswerCost of salesNet salesRetained earnings		Answer	Answer
	AnswerCost of salesNet salesRetained earnings		Answer	Answer
	To close the revenue account.
26-May	AnswerCost of salesNet salesRetained earnings		Answer	Answer
	AnswerCost of salesNet salesRetained earnings		Answer	Answer
	SG&A expense and other		Answer	Answer
	Interest expense, net		Answer	Answer
	Income tax expense		Answer	Answer
	To close the expense accounts.

Net Sales
	Answer	16,689.6	Bal.
	Answer	Answer	Bal.

Retained Earnings
	Answer	12,041.4	Bal.
	Answer	Answer
	Answer	Answer	Bal.

Cost of Sales
Bal.	10,758.9	Answer
Bal.	Answer	Answer

SG&A Expense
Bal.	3,098.4	Answer
Bal.	Answer	Answer

Interest Expense, net
Bal.	329.1	Answer
Bal.	Answer	Answer

Income Tax Expense
Bal.	780.5	Answer
Bal.	Answer	Answer