HOTEL AND RESTAURANT ACCOUNTING Chapter 3 Student: Period: Assignment: 3-3 Increase/Decrease Effect on Account Classification Instructions: From the following business transactions, name the accounts involved; classify the accounts using (A) Asset, (L) Liability, (EQ) Equity, (R) Revenue, (EX) Expense; and identify the Increase (1) or Decrease (D) effect. Example: Borrowed $15,000 from a bank. Account Classification Effect Cash A Note Payable L Comment: Each business transaction is independent, they may not be for the same time period or company. 1. The Asset Method is used. On March 22, supplies of $700 are purchased on open account. 2. A June 3 guest tab provides the following information: food $40, sales tax $1.20, the guest paid the tab with cash. 3. On May 7, the electric bill for $669 is received. The company decides to hold it for payment until the end of the month per the provided terms of payment. The accrual system of accounting is used and all invoices received are recorded at time of receipt. 4. On May 31, the invoice in number 3 is paid by issuing check number 285. 5. On October 31, the Sales Tax Payable account has a balance of $2,514. On November 11, check number 921 is issued to the state sales tax department.. On April 6, a corporation repurchased 500 shares of its $1 par common stock, paying $7,500. 7. On June 1, a one-year fire insurance policy is purchased. Check number 423 is issued for $6,000. 8. On May 14, land $25,000 and building $98,000 are purchased with a down-payment of $30,000 (check number 532) and a bank loan for the balance. 9. The perpetual inventory system is used. A May 31 summary report shows that $3,500 of food provisions was issued from the storeroom to the kitchen for the month. 10. On September 10, the owner of a proprietorship invests $15,000 cash and equipment with a basis of $9,000 into a lodging business. 11. The perpetual inventory system is used. April 8, a $245 storeroom food purchase is made and paid upon delivery. Check number 296 is issued. 12. On June 1, check number 652 for $900 is issued, paying the June rent. 13. On April 30, check number 274 for $2,000 is issued, paying the May rent. 14. The perpetual inventory system is used. On June 20, a $215 storeroom food purchase is made on open account.HOTEL AND RESTAURANT ACCOUNTING-Assignment 3-3 Continued Student: 15. A June 6 guest tab provides the following information: food $50, sales tax $3.00; the guest paid the tab with a Master Charge credit card. 16. On July 8, a $45 direct purchase of food provisions is made on open account. The periodic system is used. 17. On March 11, check number 512 is issued, paying the currently due monthly mortgage. The principal is $645 and interest is $198. 18. A June 2 guest tab provides the following information: food $75, sales tax $4.50; the guest paid the tab with an in-house credit card. 19. On May 31, the Payroll Taxes Payable account has a balance of $2,200. On June 15, check number 152 is issued in payment thereof. 20. On July 25, check number 258 for $2,500 is issued to the owner of a proprietorship for personal use. 21. On May 12, china, glassware, and silverware is purchased for $9,000 on open account for a new food operation.22. On September 5, 30,000 shares of $1 par common stock are issued for $25 per share. 23. On April 12, a corporation repurchased 500 shares of its $1 par common stock, paying $3,000. 24. On August 22, 15,000 shares of $1 par common stock are issued at $5 per share. 25. The periodic inventory system is used. On April 8, a $198 storeroom food purchase is made on open account. 26. On April 30, check number 269 is issued to pay the invoice in number 25. 27. On June 8, a room sale of $125 is made to a guest on open account. 28. On July 10, the guest in number 27 pays the open account in full