Hello and I have a few questions for my homework.

Q1:

The following transaction occurred during the first month of operations, please indicate how the adjusting journal entry (AJE) at the end of September should be recorded:

September 15: (Description) Pays first 2 months of insurance (Amount) $1 200

• None of the others journal entries are correct, it is another journal entry
• Dr. Prepaid Insurance 1,200 and Cr. Cash 1,200
• The transaction does not need an AJE
• Dr. Prepaid Insurance 600 and Cr. Insurance Expense 600
• Dr. Insurance Expense 1,200 and Cr. Cash 1,200

A: I'm not too confidence in my answer which is Dr. Prepaid Insurance 1,200 and Cr. Cash 1,200. I was wondering what is the difference between answer 2 and 4 (other than the amount). I would like to believe the insurance expense is a credit in this case but the description is just the payment of 2 month's worth of insurance. How does AJE come in play with this question and the next question?

Q2:

The following financial statements were prepared at the end of the month of May:

TOPS IN TOPIARY - INCOME STATEMENT FOR the month of May

Revenue cr$2,540

Expenses:

Rent Expense dr$500

Advertising Expense dr$500

Wages Expense dr$200 cr$1,200

Net Income cr$1,340

TOPS IN TOPIARY - STATEMENT OF OWNER'S EQUITY FOR the month of MAY

Owner's Equity at May 1 $0

plus: Investment 2,000

plus: Net Income 1,340

less: Withdrawals 0

Owner's Equity at May 31 $3,340

TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31

ASSETS

Current Assets:

Cash $1,380

Accounts Receivable $1,500

Prepaid Rent $500

Prepaid Advertising $500

Supplies $100

Equipment $360

Total Assets $4,340

LIABILITES AND OWNER'S EQUITY

Current Liabilities:

Accounts Payable $300

Advertising Payable $500

Advances from Customers $200

Total Liabilities $3,980

Owner's Equity $3,340

Total Liabilities & OE$4,340

During June the following transactions occurred:

1)Paid the helper the $200 owed from works done in May (the amount owed is in Accounts Payable).

2)Completed the job for which the customer paid $200 in May. Tops in Topiary collected $1000 in cash once finished.

3)Paid $500 for the rent of July.

4)At the end of June notices that there are no supplies left. Makes a note to buy some in July.

5)At the end of June notices that there are few flyers left (used for advertising) worth $100 and decides to order some for July. Before ordering, the printer (supplier of flyers) asks to be paid $500 of the amount owed for the flyers done in May. Tops in Topiary pays $500.

6)In June collected in cash $3,000 for 3 jobs are done for a total of $4,200, the rest is owed in account by the customers.

7)In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

8)In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($3,000).

Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the question.

At the end of the accounting period (June 30th, T account after AJE), what is the balance of Accounts Payable?

• $200
• $500
• $100
• $300
• None of the others alternatives are correct

A: I'm not too sure how to solve this question and would love some help in order to solve this question about A/P. I think it's $500 because if I add May's A/P (200) with June's A/P (300) it's $500. I don't know if it's right or wrong, would love some feedback on my answer.

Q3: (It's very similar to question 2, has the same F/S)

During June the following transactions occurred:

1) Paid the helper the $1,000 owed from works done in May (the amount owed is in Accounts Payable).

2) Completed the job for which the customer paid $200 in May. Tops in Topiary collected $2000 in cash once finished.

3) Paid $500 for the rent of July.

4) At the end of June notices that there are no supplies left. Makes a note to buy some in July.

5) At the end of June notices that there are few flyers left (used for advertising) worth $200 and decides to order some for July. Before ordering, the printer (supplier of flyers) asks to be paid $600 of the amount owed for the flyers done in May. Tops in Topiary pays $600.

6) In June collected in cash $3,000 for 3 jobs are done for a total of $4,500, the rest is owed in account by the customers.

7) In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years.

8) In June 23rd Edward Scissorhands withdrew some cash for personal reasons ($2,000).

Prepare "T" Accounts in ACCRUAL Basis for the period ended on June 30th and then answer the questions.

At the end of the accounting period (June 30th, T account after AJE), what is the balance of Cash/Bank account (use only one account for all cash/cheque transactions)

• Between $1,200 and $1,599
• Between $800 and $1,199
• Between $1,600 and $2,000
• Less than $800
• More than $2,000

A: Similar to question 2, I'm not too sure about this one. I think it's more than $2 000 because if I add up May's cash + with June's transaction (1 380+2 000-500-600+4 500-2 000=4 780) that'll be more than $2 000. I was wondering it my thinking was correct? Sorry and thank you for your time.