Probienis PROBLEM 3.1 Recording Transactions na Jouma LO 3, 4, 5, 12 Louis Dixon, a dentist, resigned from his position with a large dental group in order to begin his own pediatric dental practice. The practice was organized as a sole proprietorship. called Louis Dixon Pediatric Dentistry. The business transactions during September while the new venture was being organized are listed below. Sept. 1 Dixon opened a bank account in the name of the business by depositing $50,000 cash, which he had saved over a number of years. Sept. 10 Purchased a small office building located on a large lot for a total price of $182.400. of which 5106,000 was applicable to the land and $76.400 to the building. A cash payment of $36.500 was made and a note payable was issued for the balance of the purchase price Scanned with CamScanner Problems Sept. 15 Purchased a microcomputer system from Computer Stores, Inc., for $4.680 cash. Sept. 19 Purchased office furnishings, including dental equipment. from Turnkey Operations, 1. at a cost of $5.760. A cash down payment of $960 was made, the balance to be vaid in three equal installments due September 28, October 28, and November 28. I'Ne purchase was on open account and did not require signing of a promissory note. Sept. 26 A $140 monitor in the microcomputer system purchased on September 15 stopped working. The monitor was returned to Computer Stores, Inc., which promised to re- fund the S140 within five days. Sept. 28 Paid Turkey Operations, Inc.. S1600 cash as the first installment due on the account payable for office furnishings. Sept. 30 Received S140 cash from Computer Stores. Inc., in full settlement of the account re- ceivable created on September 26. Instructions .. Prepare journal entries to record the above transactions. Select the appropriate account titles from the following chart of accounts: Cash Office Furnishings Accounts Receivable Notes Payable Land Accounts Payable Building Louis Dixon, Capital Computer System b. What impact did the Sept. 10 transaction have on the financial position of the company? (In- dicate direction and dollar effect of this transaction on the proprietorship's assets, liabilities. and owner's equity.) Scanned with CamScanner PROLOM 3.3 Journal Entries LO 3.4 6. 6, 7, 8, 12 City Flights provides transportation by helicopter between a major airport and various business centers of a large city. Among the ledger accounts used by the company are the following: Cash Passenger Fare Revenue Accounts Payable Advertising Expense Aircraft Fuel Expense Accounts Receivable Rent Expense O. Wright, Capital Repair & Maintenance Expense O. Wright, Drawing Salaries Expense 134 CHAPTER 3 The Accounting Cycle: Capturing Economic Events Some of the January transactions of Ciry Flights are listed below. Jan. 3 Paid $3.520 rent for hangar space during January Jan. 4 Placed advertising in local newspapers for publication during January. The agreed price Jan. 1S Cash receipts from passengers for the first half of January amounted to $23.160. Jan. 15 O Wright, the owner , withdrew $7.500 cash for personal use. Jan. 16 Paid salaries to employces for services rendered in first half of January, 513.200. Jan. 25 Provided transportation for executives of the Hurley Corporation, a long-time credit customer. Sent bill for $470. due within 30 days. Jan. 29 Received a bill from Western Oil Co. for fuel used in January, amounting to $4.340 and payable by February 10. Jan. 31. Paid $3.372 to Stevens Motors for repair and maintenance work during January Instructions 1. Prepare a journal entry (including an explanation) for each of the above transactions. Describe the effect of the January 29 transaction involving fuel used in January on each of the following: assets, liabilities, owner's equity, and net income. For each of the four items, indi- cate whether the transaction caused an increase, decrease, or no effect. Scanned with CamScanner PROBLEM 3.4 Analyzing Transactions and Preparing Journal Entries LQ 1, 3, 4, 6, 7, 8, 12 Garwood Marine is a boat repair yard. During August its transactions included the following: 1. On August 1. paid rent for the month of August, 54,400. 2. On August 3. at request of Kiwi Insurance, Inc., made repairs on boat of Michael Fay. Sent bill for $5,620 for services rendered to Kiwi Insurance, Inc. (Credit Repair Service Revenue.) 3. On August 9. made repairs to boat of Dennis Conner and collected in full the charge of $2.530. 4. On August 14. placed advertisement in Yachting World to be published in issue of August 20, at cost of $165. payment to be made within 30 days. On August 25, received a check for 55.620 from Kiwi Insurance, Inc., representing collection of the receivable of August 3. 6. On August 26, made repairs on the vessel Independent totaling $1.890. Collected $400 cash; balance due within 30 days. 7. On August 30, sent check to Yachting World in payment of the liability incurred on August 14. 8. On August 31, Barbara Garwood, owner of Garwood Marine, withdrew 57,600 for personal use. Instructions 2. Write an analysis of each transaction. An example of the type of analysis desired is as follows: 1. 2. Rent is an operating expense. Expenses are recorded by debits. Debit Rent Expense. 54.400. du The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash, 54,400. b. Prepare a journal entry (including explanation) for each of the above transactions Transactions 1.7 and 8 all involve cash payments, yet only one of these transactions is recorded as an expense. Describe three situations in which a cash payment would not involve recogni- tion of an expense. PROBLEM 3.5 Preparing Journal Entries, Posting. and Preparing a Trial Balance LO 2, 3, 4, 5, 6, 10, 12 G In June 2001, Pat Campbell organized a corporation to provide crop dusting services. The com- pany. called Campbell Crop Dusting, began operations immediately. Transactions during the month of June were as follows: June 1 Campbell deposited $60.000 cash in a bank account in the name of the business, June 2 Purchased a crop-dusting aircraft from Utility Aircraft for $220.000. Made a $40,000 cash down payment and issued a note payable for $180.000 June 4 Paid Woodrow Airport $2.500 to rent office and hangar space for the month. June 15 Billed customers $8.320 for crop-dusting services rendered during the first half of June. June 15 Paid $5.880 salaries to employees for services rendered during the first half of June, June 18 Paid Hannigan's Hangar $1.890 for maintenance and repair services. June 25 Collected $4,910 of the amounts billed to customers on June 15. June 30 Billed customers $16,450 for crop-dusting services rendered during the second half of the month. Scanned with CamScanner Problems 135 June 30 Paid $6.000 in salaries to employees for services rendered during the second half of Junt, June 30 Received a fuel bill from Henry's Feed & Fuel for $2.510 of aircraft fuel purchased during June. This amount is due by July 10. June 30 Campbell withdrew 52.000 cash from the business for personal use. The account titles used by Campbell Crop Dusting were: Cash Put Campbell, Drawing Accounts Receivable Crop Dusting Revenue Aircrant Maintenance Expense Notes Payable Fuel Expense Accounts Payable Salanes Expense Pat Campbell. Capital Rent Expense Instructions Based on the foregoing transactions: 1. Prepare journal entries. Post to ledger accounts. c. Prepare a trial balance at June 30, 2001: d. Using the trial balance at June 30, 2001 (parte), compute each of the following at June 30. 2001: total assets, total liabilities. total owner's equity. Are these amounts the figures that would be reported for assets, liabilities, and owner's equity in the balance s'eet at June 30, 2001? Explain your answer briefly. Scanned with CamScanner