The QUESTIONS are attached below. There are 3 questions of Accounting 1

Answer All the 3 problems Problem 1 Capital Finance an accounting Consulting Company, during the first month of operations had the following events and transactions: 1. 2. 3. 4. 5. 6. 7. 8. 9. Stockholder's invested $40.000 cash in exchange of common stock of the corporation Hired a secretary at a salary of $2.000 per month Purchased $800 of supplies on account from Transvalor supply company Paid office rent of $1.400 Completed a tax assignment and billed clients $1.500 services provided Received $4.200 advance on a management consulting engagement Received cash of 3.300 for services completed Paid secretary $2.000 salary Paid 50% of the balance due Transvalor supply company The company uses the following accounts: Cash, Accounts receivable, Supplies, Accounts payable, Unearned service revenue, Salaries, and wages Expense and Rent expense Required: a. Journalise the transactions b. Post to the ledger T accounts c. Prepare a trial balance on May 31st, 2012 Problem 2 (20 points) The Epalinges Golf Club details the following accounts in its financial statements. Accounts Payable: Accounts receivable. Equipment: Sales revenue: Service revenue: Inventory: Mortgage payable: Supplies expense _____________________________________________________________________________ 1 Rent expense: Salaries and wages expense: Required: Classify each of the above accounts as an ASSET (A) LIABILITY (L) STOCKHOLDER'S EQUITY (SE) REVENUE(R) OR EXPENSE (E) _____________________________________________________________________________ 2 Problem 3 (40 points) Ken Hensley entreprises, Inc. is a small recording studio in St Louis . Rock bands use the studio to mix high-quality demo recordings distributed to talent agents. New clients are required to pay in advance for studio services. Bands with established credit are billed for studio services at the end of each month. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2002, follows. (Keep in mind that adjusting entries already have been made for the first eleven months of 2002, but not for December). KEN HENSLEY ENTREPRISES, INC Unadjusted Trial Balance December 31, 2002 Cash Accounts receivable Studio supplies Unexpired insurance Prepaid studio rent Recording equipment Accumulated depreciation recording equipment Notes payable Interest payable Income taxes payable Unearned studio revenue Capital stock Retained earnings Studio revenue earned Salaries expense Supplies expense Insurance expense Depreciation expense Studio rent expense Interest expense Utilities expense Income taxes expense $ 44.850 81.400 7.600 500 4.000 90.000 $ 52.500 16.000 840 3.200 9.600 80.000 38.000 107.000 18.000 1.200 1.000 16.500 21.000 840 2.350 17.900 $307.140 $307.140 Other Data: 1. Records show that $4.400 in studio revenue had not billed or recorded as of December 31. 2. Studio supplies on hand at December 31 amount to $6.900 _____________________________________________________________________________ 3 3. On August 1, 2002, the studio purchased a six-month insurance policy for $1.500. The entire premium was initially debited to Unexpired Insurance. 4. The studio is located in a rented building. On November 1, 2002, the studio paid $6.000 rent in advance for November December and January. The entire amount was debited to prepaid studio rent. 5. The useful life of the studio's recording equipment is estimated to be five years (or 60 months. The straight-line method of depreciation is used. 6. On May 1, 2002, the studio borrowed$16.000 by signing a 12-month, 9% note payable To First Federal Bank of St. Louis.The entire $16.000 plus 12 month's interest is due in full on April 30, 2003. 7. Records show that $3.600 of cash receipts originally recorded as Unearned Studio Revenue had been earned as of December 31. 8. Salaries earned by recording technicians that remain unpaid at December 31 amount to $540. 9. The studio's accountant estimates that income taxes expense for the entire year ended December 31, 2002, is $19.600. (Note that $17.900 of this amount has already been Recorded). Insructions: 1. Prepare the necessary adjusting entries for December _____________________________________________________________________________ 4