I am trying to find an explanation for 72, 77, 78, 80 ONLY.

Thank You,

Sara Raynes is a sole proprietor and interior designer. She has been in business for several years. Regular operating transactions are journalized daily and posted no less often than monthly. She prepares adjusting entries and financial statements on a monthly basis. However, she prepares closing entries only at the end of her fiscal year, which is December 31.

Table 2 on pages 12 and 13 shows her year-to-date, adjusted account balances as of November 30, 2014 in the form of T-accounts. (Accounts with a zero balance are not included because of space limitations on the page.)

The balance of Accounts Receivable on 11-30-14 consists of one customer account.

Sara Raynes made a capital contribution only once during the year (on March 7, 2014) in the amount of $15,000. The transaction was correctly recorded and posted in the month of March 2014.

Table 2 also shows her transactions for the month of December 2014. Additional information is provided that will be needed for adjusting entries at the end of December.

Company procedure is to record purchases of supplies and insurance in asset accounts and adjust for ending supplies on hand and unexpired insurance at the end of each month.

For questions 69 through 73 use the above data and Table 2. Consider in each case that all the transactions for December 2014 have been journalized and posted correctly, but no adjusting or closing entries have been made for December. Write the identifying letter of the best answer on your answer sheet.

*69. The balance in the Cash in Bank account is

A. $13,974 B. $21,408 C. $22,068 D. $35,382 E. $40,142

*70. The balance of the Supplies account is

A. $1,425 B. $2,670 C. $3,255 D. $4,500 E. $5,925

71. The balance of the Prepaid Insurance account is

A. zero B. $1,782 C. $1,944 D. $2,098 E. $3,792

*72. The balancing total of the trial balance is

A. $179,606 B. $182,034 C. $186,696 D. $201,696

73. In the General Ledger on January 1, 2014, the balance of Sara Raynes, Capital was

A. zero B. $15,000 C. $69,226 D. $84,226 E. $99,226

Group 10_continued

Continue to use the information in Group 10. Consider now that the work sheet has been prepared for the twelve months ending December 31, 2014 and that any necessary adjusting entries have been prepared and posted to the general ledger. Closing entries have not been journalized at this time. For questions 74 through 78 write the identifying letter of the best answer on your answer sheet.

*74. The balance of the Supplies Expense account is

A. $10,990 B. $15,490 C. $18,745 D. $19,990

75. The balance of the Insurance Expense account is

A. zero B. $162 C. $1,694 D. $1,782 E. $1,856 F. $1,944

76. The balance of Prepaid Insurance is

A. zero B. $162 C. $1,694 D. $1,782 E. $1,856 F. $1,944

*77. The net income for the twelve months ending December 31, 2014 is

A. $21,269 B. $37,451 C. $59,136 D. $64,769 E. $69,431

*78. The subtotal of the work sheets Balance Sheet Debit column before net income

is calculated is

A. $32,789 B. $76,289 C. $149,245 D. $153,907 E. $186,696

*80. The balance of the account called Sara Raynes, Capital is

A. $69,226 D. $105,495

B. $84,226 E. $120,495

C. $90,495 F. $148,995

THE ANSWERS:

69. B

70. E

71 C

73 C

74 D

75 E

76 D

79. A

ransaction Cash in Bank Accounts Receivable Supplies Date 1 Issued a check for $425 for the December rent. 1 (11-30-14) 35,382 (11-30-14) 1,800 (11-30-14) 2,670 Issued check #3311 for $1,944 for a 12-month insurance policy. The coverage is effective on this date 2 Issued a check to purchase design supplies $650 4 Received invoice from Designer Ideas for fabric samples purchased on account, $250 5 Received S960 for design services performed. 8 Issued a check to Design Supply in payment on account, $2,740 9 Received S1,800 from Dale Jenkins on account. 9 Issued a check for $1,980 for design supplies 10 Used debit card to pay for truck rental used to transport equipment and supplies Prepaid Insurance Furniture & Equipment (11-30-14) 0 (11-30-14) 69,330 to a design job for a museum $285 12 Issued an invoice on account to Central Shopping Center $8,250 for the completion of designing and installing Christmas displays. 15 18 20 Received S500 for redecorating the university president's home. 22 Issued a check for $3,000 for owner's personal use 27 Receved S1,500 for redecorating a commercial property 30 Issued a check to Designer Ideas for $1,630 on account. 31 Issued check for $2,000 for owner's personal use 31 Used debit card to buy design supplies S375. Issued a check for $205 for utilities used at the office. Issued a check for $3,500 for a new leather couch for the office waiting room. Accts. aeDesigner Ideas (11-30-14).530 Accts. Pay.-Design Supply Sara Ravnes, Capital (11-30-14) 2,740 11-30-14) 84,226 * Physical inventory of supplies on December 31, 2014 was $1,425 Summary of insurance policies purchased Sara axnss Drawing Design Fees Rent& Utilities Expense December 1, 2013 $1,848 for a 12-month policy (coverage effective 12-1-13) December 1, 2014 (see above check #3311) (11-30-14) 38,500 0-14) 91,010 11-30-14) 7,480 72. The balancing total of the trial balance is 77. The net income for the twelve months ending December 31, 2014 is 78. The subtotal of the work sheet's Balance Sheet Debit column before net income A $179,606 B. $182,034 C. $186,696 D. S201,696 Insurance Expenses Delivery Expense Supplies Expense A. $21,269 B. S37,451 C, $59,136 D. $64,769 E. $69,431 (11-30-14) 1,694 (11-30-14) 7,210 (11-30-14) 15,490 is calculated is A. $32,789 B. S76,289 C. S149,245 D. $153,907E. S186,696 *80. The balance of the account called Sara Raynes, Capital is A. $69 226 B. $84,226 C. S90,495 D. $105,495 E. $120,495 F. $148,995