Problem in Accounting

The Health & Fitness Center Fall 2020

Instructions Use the following TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal, and Financial Statements including Income Statement, Balance Sheet, and (simplified) Statement of Stockholders Equity, the second month of operations for the Health & Fitness Center. Use the Perpetual Inventory method as discussed in class for all sales of merchandise.

TRANSACTIONS

Feb 1 Purchased office supplies for $325 on an open account from Kellis Office Supplies. The Fitness Center has 30 days to pay for the supplies.

Feb 1 Purchased a 4-month advertising campaign to be broadcast on local radio stations during the months of Feb. through May. Paid $2,200 in advance for this ad campaign.

Feb 1 Sold 120, twelve-month memberships to the Fitness Center for $415 each. All membership dues were collected in cash.

Feb 3 Paid wages due on January 31.

Feb 5 Purchased on account a total of 160 shirts with an embroidered Fitness Center logo from C & C Creations at a price of $11 per shirt. These shirts are

available for resale to customers

Feb 6 Purchased concessions for $2,550 on account from Advocare Distributing, Inc. These concessions consist of energy drinks, nutritional supplements, etc., and are available for resale to customers.

Feb 7 Provided 45 hours of personal training services to members. Fees are charged at a rate of $38 an hour. The total amount was billed to individual members accounts.

Feb 9 Paid the total amounts due to Kellis Office Supplies for the Feb. 1st transaction and C&C Creations for the Feb. 5th transaction.

Feb 10 Sold thirty five shirts to a corporate member, Allen & Associates for $32 each. Collected $800 in cash and the balance is owed to the Fitness Center on account.

Feb 11 Purchased Valentines Day flowers for the reception desk for $80 cash.

Feb 13 Sold a gift certificate for $100. The gift certificate is valid for one year and is redeemable for a 60 minute massage.

Feb 15 The concessions stand reported the following sales for the first half of the month. All sales were billed to the members account.

$ Sales Amount $3,840 $ Cost of Merchandise $2,160

Feb 15 For the first half of February, provided 25 hours of massage therapy at a rate of $75/hour. Billed the individual members accounts for services provided.

Feb 16 Paid wages and salaries of $3,195 to Fitness Center employees.

Feb 17 Gift certificates totaling $250 were redeemed for massage therapy performed.

Feb 18 Received $2,200 for services previously billed to customers accounts.

Feb 19 Purchased with cash additional concessions for $850 from Advocare Distributing.

Feb 20 Paid $4,320 on accounts payable.

Feb 21 Received $3,250 for services previously billed to customers accounts.

Feb 22 Collected the balance of what was owed on account from Allen & Associates for the Feb.10 transaction.

Feb 23 Received a utility bill that totaled $419 for the month. It is due March 12.

Feb 24 Sold fifty shirts to individual customers for $39 each. Collected 30% in cash, the balance is owed to the Fitness Center on account.

Feb 25 The owners of the company invested an additional $15,000 into the Fitness Center in exchange for common stock.

Feb 26 Cash sales of shirts: 30 shirts sold at $42 each.

Feb 27 The Fitness Center paid a dividend of $2,000 to its shareholders.

Feb 28 Purchased additional equipment for $27,000; paid $17,000 in cash and signed a two year, 8% note for the balance.

Feb 28 Fees for massage therapy for the last half of February totaled $3,900. All of these transactions were billed directly to each members account. Fees for personal training given during February amounted to $5,160. Forty percent of these fees were collected in cash.

Feb 28 Credit sales for concessions during the last half of February totaled $1,940. Cash sales for concessions during the last half of February totaled $680. Cost of the concessions sold during the last half of February was $1,195.

Feb 28 Paid $1,100 on accounts payable.

ADDITIONAL INFORMATION:

1. Depreciation expense for the month of February should be calculated using the straight-line method. [You do not need to depreciate the new equipment purchased on 2/28.]

2. At the end of the month, a physical count was taken of the Fitness Centers inventories. It revealed the following information:

a. Forty two of the shirts for resale were on hand at February 28.

b. Concession merchandise still on hand as of February 28 amounted to $523.

3. Salaries earned by employees but unpaid on February 28th totaled $2,935.

4. Interest accrued as of February 28th is $1,875.

5. Office Supplies still on hand on February 28th totaled $90.