Question
Comprehensive Accounting Cycle Review 11-2 Karen Noonan opened Sage Hill Inc. on February 1, 2017. During February, the following transactions were completed: Feb. 1 Issued
Comprehensive Accounting Cycle Review 11-2
Karen Noonan opened Sage Hill Inc. on February 1, 2017. During February, the following transactions were completed:
Feb. 1 Issued 4,200 shares of Sage Hill common stock for $10,140. Each share has a $1.50 par.
1 Borrowed $7,200 on a 2-year, 6% note payable.
1 Paid $9,000 to purchase used floor and window cleaning equipment from a company going out of business ($4,640 was for the floor equipment and $4,360 for the window equipment).
1 Paid $170 for February Internet and phone services.
3 Purchased cleaning supplies for $760 on account.
4 Hired 4 employees. Each will be paid $370 per 5-day work week (Monday Friday). Employees will begin working Monday, February 9.
5 Obtained insurance coverage for $11,040 per year. Coverage runs from February 1, 2017, through January 31, 2018. Karen paid $2,760 cash for the first quarter of coverage.
5 Discussions with the insurance agent indicated that providing outside window cleaning services would cost too much to insure. Karen sold the window cleaning equipment for $3,080 cash.
16 Billed customers $3,040 for cleaning services performed through February 13, 2017.
17 Received $468 from a customer for 4 weeks of cleaning services to begin February 21, 2017.
18 Paid $230 on amount owed on cleaning supplies.
20 Paid $3 per share to buy 300 shares of Sage Hill common stock from a shareholder who disagreed with management goals. The shares will be held as treasury shares.
23 Billed customers $3,350 for cleaning services performed through February 20.
24 Paid cash for employees wages for 2 weeks (February 913 and 1620).
25 Collected $1,950 cash from customers billed on February 16.
27 Paid $170 for Internet and phone services for March.
28 Declared and paid a cash dividend of $0.25 per share.
1) Journalize the February transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
2) Post to the Ledger Accounts in Order of Journal Entries above.
3) Prepare a Trial Balance at February, 28th 2017
Journalize the following adjustments. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 1,527.)
(1) |
| Services performed for customers through February 27, 2017, but unbilled and uncollected were $2,960. |
(2) |
| Received notice that a customer who was billed $200 for services performed February 10 has filed for bankruptcy. Sage Hill does not expect to collect any portion of this outstanding receivable. |
(3) |
| Sage Hill uses the allowance method to estimate bad debts. Sage Hill estimates that 3% of its month-end receivables will not be collected. |
(4) |
| Record 1 month of depreciation for the floor equipment. Use the straight-line method, an estimated life of 4 years, and $800 salvage value. |
(5) |
| Record 1 month of insurance expense. |
(6) |
| An inventory count shows $310 of supplies on hand at February 28. |
(7) |
| One week of services were performed for the customer who paid in advance on February 17. |
(8) |
| Accrue for wages owed through February 28, 2017. |
(9) |
| Accrue for interest expense for 1 month. |
(10) |
| Karen estimates a 20% income tax rate. (Hint: Prepare an income statement up to income before taxes to help with the income tax calculation.) |
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