Principles of Accounting Week 3 Apply

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Principles of Accounting Week 3 Apply Answers

Adams Engineering completed the following transactions in the month of June.
Using the following transactions, record journal entries, create financial statements, and assess the impact of each transaction on  the financial statements.
  

Jun. 1 Leslie Adams, the owner, invested $124,000 cash, office equipment with a value of $11,000, and $72,000 of drafting equipment to launch the company.
Jun. 2 The company purchased land worth $55,000 for an office by paying $14,700 cash and signing a long-term note payable for $40,300.
Jun. 3 The company purchased a portable building with $49,000 cash and moved it onto the land acquired on June 2.
Jun. 4 The company paid $6,600 cash for the premium on an 18-month insurance policy.
Jun. 5 The company completed and delivered a set of plans for a client and collected $11,000 cash.
Jun. 6 The company purchased $27,200 of additional drafting equipment by paying $15,500 cash and signing a long-term note payable for $11,700.
Jun. 7 The company completed $23,600 of engineering services for a client. This amount is to be received in 30 days.
Jun. 8 The company purchased $1,750 of additional office equipment on credit.
Jun. 9 The company completed engineering services for $24,400 on credit.
Jun. 10 The company received a bill for rent of equipment that was used on a recently completed job. The $1,900 rent cost must be paid within 30 days.
Jun. 12 The company collected $11,800 cash in partial payment from the client billed on June 9.
Jun. 14 The company paid $1,200 cash for wages to a drafting assistant.
Jun. 17 The company paid $1,750 cash to settle the account payable created in on June 8.
Jun. 20 The company paid $1,225 cash for minor maintenance of its drafting equipment.
Jun. 23 Leslie Adams withdrew $9,720 cash from the company for personal use.
Jun. 28 The company paid $1,200 cash for wages to a drafting assistant.
Jun. 29 The company paid $2,980 cash for advertisements on the web during June.
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Every journal entry must keep the accounting equation in balance.  Prepare the journal entries for each of the transactions, entering the debits before the credits.  Each transaction is automatically posted to the General Ledger and the Trial Balance as soon as you click “Record Entry”. 

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NoDateAccount TitleDebitCredit
1Jun 01Cash124,000
Office equipment11,000
Drafting equipment72,000
L. Adams, Capital207,000
2Jun 02Land55,000
Notes payable40,300
Cash14,700
3Jun 03Building49,000
Cash49,000
4Jun 04Prepaid insurance6,600
Cash6,600
5Jun 05Cash11,000
Engineering fees earned11,000
6Jun 06Drafting equipment27,200
Cash15,500
Notes payable11,700
7Jun 07Accounts receivable23,600
Engineering fees earned23,600
8Jun 08Office equipment1,750
Accounts payable1,750
9Jun 09Accounts receivable24,400
Engineering fees earned24,400
10Jun 10Equipment rental expense1,900
Accounts payable1,900
11Jun 12Cash11,800
Accounts receivable11,800
12Jun 14Wages expense1,200
Cash1,200
13Jun 17Accounts payable1,750
Cash1,750
14Jun 20Repairs expense1,225
Cash1,225
15Jun 23L. Adams, Withdrawals9,720
Cash9,720
16Jun 28Wages expense1,200
Cash1,200
17Jun 29Advertising expense2,980
Cash2,980
  • Requirement
  • General Ledger
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Each journal entry is posted automatically to the general ledger (abnormal balances appear in parentheses).   Think of the general ledger as sorting all of your journal entries by account title. Click on any of the individual amounts to return to the underlying journal entry.  

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 General Ledger Account
 Cash No. Date Debit Credit Balance     Jun 01     0   1 Jun 01 124,000 124,000   2 Jun 02 14,700 109,300   3 Jun 03 49,000 60,300   4 Jun 04 6,600 53,700   5 Jun 05 11,000 64,700   6 Jun 06 15,500 49,200   11 Jun 12 11,800 61,000   12 Jun 14 1,200 59,800   13 Jun 17 1,750 58,050   14 Jun 20 1,225 56,825   15 Jun 23 9,720 47,105   16 Jun 28 1,200 45,905   17 Jun 29 2,980 42,925  Accounts receivable No. Date Debit Credit Balance     Jun 01     0   7 Jun 07 23,600 23,600   9 Jun 09 24,400 48,000   11 Jun 12 11,800 36,200  
Prepaid insurance No. Date Debit Credit Balance     Jun 01     0   4 Jun 04 6,600 6,600  Office equipment No. Date Debit Credit Balance   Jun 01     0 1 Jun 01 11,000 11,000 8 Jun 08 1,750 12,750 
 Drafting equipment No. Date Debit Credit Balance     Jun 01     0   1 Jun 01 72,000 72,000   6 Jun 06 27,200 99,200  Building No. Date Debit Credit Balance     Jun 01     0   3 Jun 03 49,000 49,000  
 Land No. Date Debit Credit Balance     Jun 01     0   2 Jun 02 55,000 55,000  Accounts payable No. Date Debit Credit Balance     Jun 01     0   8 Jun 08 1,750 1,750   10 Jun 10 1,900 3,650   13 Jun 17 1,750 1,900  
 Notes payable No. Date Debit Credit Balance     Jun 01     0   2 Jun 02 40,300 40,300   6 Jun 06 11,700 52,000  L. Adams, Capital No. Date Debit Credit Balance   Jun 01     0 1 Jun 01 207,000 207,000      
 L. Adams, Withdrawals No. Date Debit Credit Balance     Jun 01     0   15 Jun 23 9,720 9,720  Engineering fees earned No. Date Debit Credit Balance     Jun 01     0   5 Jun 05 11,000 11,000   7 Jun 07 23,600 34,600   9 Jun 09 24,400 59,000  
 Wages expense No. Date Debit Credit Balance     Jun 01     0   12 Jun 14 1,200 1,200   16 Jun 28 1,200 2,400  Equipment rental expense No. Date Debit Credit Balance     Jun 01     0   10 Jun 10 1,900 1,900  
 Advertising expense No. Date Debit Credit Balance     Jun 01     0   17 Jun 29 2,980 2,980  Repairs expense No. Date Debit Credit Balance     Jun 01     0   14 Jun 20 1,225 1,225  
  • General Journal
  • Trial Balance
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

The trial balance is a listing of all account balances from the General Ledger as of a specific date.  Click on any individual account balance to return to the General Ledger.  The trial balance is only as accurate as the underlying journal entries.  If the total debits do not equal the total credits, you must have one or more journal entries that are out of balance.  If you have an abnormal ending balance (indicated with brackets in the general ledger), you should review the journal entries that affected that account to ensure that the journal entries are correct.

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Adams Engineering
Trial Balance
June 29, 2019
Account TitleDebitCredit
Cash42,925
Accounts receivable36,200
Prepaid insurance6,600
Office equipment12,750
Drafting equipment99,200
Building49,000
Land55,000
Accounts payable1,900
Notes payable52,000
L. Adams, Capital207,000
L. Adams, Withdrawals9,720
Engineering fees earned59,000
Wages expense2,400
Equipment rental expense1,900
Advertising expense2,980
Repairs expense1,225
Total319,900319,900
  • General Ledger
  • Income Statement
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

The income statement reports the change in equity attributable to the operation of the business during a specific period of time.  Using the dropdown buttons, select the financial statement elements and account titles to be included on the income statement. The account balances will automatically populate. Did the company report net income or net loss during the current month?

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Adams Engineering Income Statement For Month Ended June 30, 2019 Revenues: Engineering fees earned $59,000 Total revenues $59,000 Expenses: Wages expense 2,400 Equipment rental expense 1,900 Advertising expense 2,980 Repairs expense 1,225 Prepaid insurance 6,600 Total expenses 15,105 Net income $43,895
  • Trial Balance
  • St Owners Equity
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Using the dropdown buttons, select the item that accurately describes the values that either increase or decrease the owner’s capital balance.

 
Adams Engineering Statement of Owner’s Equity For Month Ended June 30, 2019 L. Adams, Capital, June 1, 2019 $0 Add: Investments by owner $207,000 Net income 43,895 250,895 250,895 Less: Withdrawals by owner 9,720 9,720 L. Adams, Capital, June 30, 2019 $241,175
  • Income Statement
  • Balance Sheet
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Using the dropdown buttons, select the financial statement elements and account titles to be included on the balance sheet.   The account balances will automatically populate. 

 
Adams Engineering Balance Sheet June 30, 2019 Assets: Cash $42,925 Accounts receivable 36,200 Office equipment 12,750 Prepaid insurance 6,600 Land 55,000 Drafting equipment 99,200 Building 49,000 Total assets $301,675 Liabilities: Accounts payable $1,900 Notes payable 52,000 Total liabilities $53,900 Equity: L. Adams, Capital 241,175 Total liabilities and equity $295,075
  • St Owners Equity
  • Impact on Equity
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

While the balance sheet reports the detail of individual assets and liabilities, owner’s equity is reported in total.  The expanded accounting equation shows the four subsets of equity: Revenues, Expenses, Owner investments and Owner withdrawals.  Using the dropdown buttons, indicate the impact each transaction has on total equity (if any).  Compare the total with the amount of equity reported on the balance sheet.

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Transaction Impact on Equity Leslie Adams, the owner, invested $124,000 cash, office equipment with a value of $11,000, and $72,000 of drafting equipment to launch the company. Increased equity – Owner investment $207,000 207,000 The company purchased land worth $55,000 for an office by paying $14,700 cash and signing a long-term note payable for $40,300. 0 55,000 The company purchased a portable building with $49,000 cash and moved it onto the land acquired on June 2. 0 49,000 The company paid $6,600 cash for the premium on an 18-month insurance policy. No change in equity 0 6,600 The company completed and delivered a set of plans for a client and collected $11,000 cash. Increased equity – Revenue 11,000 11,000 The company purchased $27,200 of additional drafting equipment by paying $15,500 cash and signing a long-term note payable for $11,700. 0 27,200 The company completed $23,600 of engineering services for a client. This amount is to be received in 30 days. Increased equity – Revenue 23,600 23,600 The company purchased $1,750 of additional office equipment on credit. 0 1,750 The company completed engineering services for $24,400 on credit. Increased equity – Revenue 24,400 24,400 The company received a bill for rent of equipment that was used on a recently completed job. The $1,900 rent cost must be paid within 30 days. Decreased equity – Expense (1,900) 1,900 The company collected $11,800 cash in partial payment from the client billed on June 9. 0 11,800 The company paid $1,200 cash for wages to a drafting assistant. Decreased equity – Expense (1,200) 1,200 The company paid $1,750 cash to settle the account payable created in on June 8. 0 1,750 The company paid $1,225 cash for minor repairs of its drafting equipment. Decreased equity – Expense (1,225) 1,225 Leslie Adams withdrew $9,720 cash from the company for personal use. Decreased equity – Owner withdrawals (9,720) 9,720 The company paid $1,200 cash for wages to a drafting assistant. Decreased equity – Expense (1,200) 1,200 The company paid $2,980 cash for advertisements on the web during June. Decreased equity – Expense (2,980) 2,980 Total change in equity $247,775 What is the balance in the owner’s capital account as reported on the balance sheet? $247,775 247,775 Congratulations! You’ve successfully identified the impact each transaction has on equity.
  • Balance Sheet
  • Impact on Equity

Question 2

Ivan Kuhl opens a web consulting business called Kuhl Consulting and completes the following transactions in March.
Using the following transactions, record journal entries, create financial statements, and assess the impact of each transaction on  the financial statements.
  

Mar. 1 Kuhl invested $171,000 cash along with $22,700 in office equipment in the company.
Mar. 2 The company prepaid $12,000 cash for six months’ rent for an office. The company’s policy is to record prepaid expenses in balance sheet accounts.
Mar. 3 The company made credit purchases of office equipment for $3,700 and office supplies for $1,900. Payment is due within 10 days.
Mar. 6 The company completed services for a client and immediately received $4,700 cash.
Mar. 9 The company completed a $8,200 project for a client, who must pay within 30 days.
Mar. 12 The company paid $5,600 cash to settle the account payable created on March 3.
Mar. 19 The company paid $5,700 cash for the premium on a 12-month insurance policy. The company’s policy is to record prepaid expenses in balance sheet accounts.
Mar. 22 The company received $4,900 cash as partial payment for the work completed on March 9.
Mar. 25 The company completed work for another client for $4,600 on credit.
Mar. 29 Kuhl withdrew $5,800 cash from the company for personal use.
Mar. 30 The company purchased $1,300 of additional office supplies on credit.
Mar. 31 The company paid $1,200 cash for this month’s utility bill.
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Every journal entry must keep the accounting equation in balance.  Prepare the journal entries for each of the transactions of Kuhl Consulting, entering the debits before the credits.  Each transaction will automatically be posted to the General Ledger and the Trial Balance as soon as you click “Record Entry”. 

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NoDateAccount TitleDebitCredit
1Mar 01Cash171,000
Office equipment22,700
I. Kuhl, Capital193,700
2Mar 02Prepaid rent12,000
Cash12,000
3Mar 03Office equipment3,700
Office supplies1,900
Accounts payable5,600
4Mar 06Cash4,700
Services revenue4,700
5Mar 09Accounts receivable8,200
Services revenue8,200
6Mar 12Accounts payable5,600
Cash5,600
7Mar 19Prepaid insurance5,700
Cash5,700
8Mar 22Cash4,900
Accounts receivable4,900
9Mar 25Accounts receivable4,600
Services revenue4,600
10Mar 29I. Kuhl, Withdrawals5,800
Cash5,800
11Mar 30Office supplies1,300
Accounts payable1,300
12Mar 31Utilities expense1,200
Cash1,200
  • Requirement
  • General Ledger
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Each journal entry is posted automatically to the general ledger.   Think of the general ledger as sorting all of your journal entries by account title. Click on any of the individual

amounts to return to the underlying journal entry.

 General Ledger Account
Cash No. Date Debit Credit Balance     Mar 01     0   1 Mar 01 171,000 171,000   2 Mar 02 12,000 159,000   4 Mar 06 4,700 163,700   6 Mar 12 5,600 158,100   7 Mar 19 5,700 152,400   8 Mar 22 4,900 157,300   10 Mar 29 5,800 151,500   12 Mar 31 1,200 150,300  Accounts receivable No. Date Debit Credit Balance     Mar 01     0   5 Mar 09 8,200 8,200   8 Mar 22 4,900 3,300   9 Mar 25 4,600 7,900   
Office supplies No. Date Debit Credit Balance     Mar 01     0   3 Mar 03 1,900 1,900   11 Mar 30 1,300 3,200  Prepaid insurance No. Date Debit Credit Balance     Mar 01     0   7 Mar 19 5,700 5,700  
Prepaid rent No. Date Debit Credit Balance     Mar 01     0   2 Mar 02 12,000 12,000  Office equipment No. Date Debit Credit Balance     Mar 01     0   1 Mar 01 22,700 22,700   3 Mar 03 3,700 26,400   
 Accounts payable No. Date Debit Credit Balance     Mar 01     0   3 Mar 03 5,600 5,600   6 Mar 12 5,600 0   11 Mar 30 1,300 1,300  I. Kuhl, Capital No. Date Debit Credit Balance     Mar 01     0   1 Mar 01 193,700 193,700   
 I. Kuhl, Withdrawals No. Date Debit Credit Balance     Mar 01     0   10 Mar 29 5,800 5,800  Services revenue No. Date Debit Credit Balance     Mar 01     0   4 Mar 06 4,700 4,700   5 Mar 09 8,200 12,900   9 Mar 25 4,600 17,500   
 Utilities expense No. Date Debit Credit Balance     Mar 01     0   12 Mar 31 1,200 1,200  
  • General Journal
  • Trial Balance
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

The trial balance is a listing of all account balances from the General Ledger as of a specific date.  Click on any individual account balance to return to the General Ledger.  The trial balance is only as accurate as the underlying journal entries.  If the total debits do not equal the total credits, you there is  journal entry that is out of balance.  If you have an abnormal ending balance (indicated with brackets in the general ledger), you should review the journal entries that affected that account to ensure that the journal entries are correct.

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Kuhl Consulting
Trial Balance
March 31, 2019
Account TitleDebitCredit
Cash150,300
Accounts receivable7,900
Office supplies3,200
Prepaid insurance5,700
Prepaid rent12,000
Office equipment26,400
Accounts payable1,300
I. Kuhl, Capital193,700
I. Kuhl, Withdrawals5,800
Services revenue17,500
Utilities expense1,200
Total212,500212,500
  • General Ledger
  • Income Statement
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Using the dropdown buttons, select the financial statement elements and account titles to be included on the income statement.  The account balances will automatically populate. 

 
Kuhl Consulting Income Statement For Month Ended March 31, 2019 Revenues: Services revenue $17,500 Total revenues $17,500 Expenses: Utilities expense 1,200 Total expenses 1,200 Net income $16,300
  • Trial Balance
  • St Owners Equity
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Using the dropdown buttons, select the item that accurately describes the values that either increase or decrease the owner’s capital balance.

 
Kuhl Consulting Statement of Owner’s Equity For Month Ended March 31, 2019 I. Kuhl, Capital, March 1, 2019 Add: Owner investments $193,700 Add: Net income 16,300 210,000 210,000 Add: Owner withdrawals 5,800 5,800 I. Kuhl, Capital, March 31, 2019 $204,200
  • Income Statement
  • Balance Sheet
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

Using the dropdown buttons, select the financial statement elements and account titles to be included on the balance sheet.   The account balances will automatically populate. 

 
Kuhl Consulting Balance Sheet March 31, 2019 Assets: Cash $150,300 Accounts receivable 7,900 Office supplies 3,200 Prepaid insurance 5,700 Prepaid rent 12,000 Office equipment 26,400 Total Assets $205,500 Liabilities: Accounts payable 1,300 Total Liabilities $1,300 Owner’s Equity: I. Kuhl, Capital 204,200 Total Equity 204,200 Total Liabilities and Equity $205,500
  • St Owners Equity
  • Impact on Equity
  • Requirement
  • General Journal
  • General Ledger
  • Trial Balance
  • Income Statement
  • St Owners Equity
  • Balance Sheet
  • Impact on Equity

While the balance sheet reports the detail of individual assets and liabilities, owner’s equity is reported in total.  The expanded accounting equation shows the four subsets of equity: Revenues, Expenses, Owner investments and Owner withdrawals.  Using the dropdown buttons, indicate the impact each transaction has on total equity (if any).  Compare the total with the amount of equity reported on the balance sheet.

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Transaction Impact on Equity Mar. 1) Kuhl invested $171,000 cash along with $22,700 in office equipment in the company. Increased equity – Owner investment $193,700 193700 Mar. 2) The company prepaid $12,000 cash for six months’ rent for an office. The company’s policy is to record prepaid expenses in balance sheet accounts. 12000 Mar. 3) The company made credit purchases of office equipment for $3,700 and office supplies for $1,900. Payment is due within 10 days. 5600 Mar. 6) The company completed services for a client and immediately received $4,700 cash. Increased equity – Revenue 4,700 4700 Mar. 9) The company completed a $8,200 project for a client, who must pay within 30 days. Increased equity – Revenue 8,200 8200 Mar. 12) The company paid $5,600 cash to settle the account payable created on March 3. Decreased equity – Expense (5,600) 5600 Mar. 19) The company paid $5,700 cash for the premium on a 12-month insurance policy. The company’s policy is to record prepaid expenses in balance sheet accounts. No change in equity 0 5700 Mar. 22) The company received $4,900 cash as partial payment for the work completed on March 9. 4900 Mar. 25) The company completed work for another client for $4,600 on credit. Increased equity – Revenue 4,600 4600 Mar. 29) Kuhl withdrew $5,800 cash from the company for personal use. Decreased equity – Owner withdrawal (5,800) 5800 Mar. 30) The company purchased $1,300 of additional office supplies on credit. 1300 Mar. 31) The company paid $1,200 cash for this month’s utility bill. Decreased equity – Expense (1,200) 1200 Total impact on equity $198,600 What is the balance in the owner’s capital account as reported on the balance sheet? $198,600 204200
  • Balance Sheet
  • Impact on Equity