Reference no: EM13764612

Mr. Moore has hired you as his accountant.  The two of you discuss the business and decide upon the following chart of accounts. 

Chart of Accounts:

Assets	Revenue
111 Cash	411 Income from Services
112 Accounts Receivable	412 Concessions Income
114 Prepaid Insurance	Expenses
121 Land	511 Sailboat Rental Expense
125 Pool Structure	512 Wages Expense
126 Accumulated Depreciation, Pool Structure	513 Advertising Expense
127 Fan System	514 Utilities Expense
128 Accumulated Depreciation, Fan System	515 Interest Expense
129 Sailboats	516 Insurance Expense
130 Accumulated Depreciation, Sailboats	517 Depreciation Expense, Pool Structure
Liabilities	518 Depreciation Expense, Fan System
221 Accounts Payable	519 Depreciation Expense, Sailboats
222 Wages Payable	522 Miscellaneous Expense
223 Mortgage Payable
224 Unearned Concessions Income
Shareholder's Equity
311 Common Stock
312 Retained Earnings
313 Dividends

Mr. Moore has a general idea of what he would like you to do and his instructions are at the end of this document. When you are analyzing the transactions, think them through by visualizing the T accounts or by writing them down on scratch paper. In the case of unfamiliar types of transactions, specific instructions for recording them are included. However, reason them out for yourself as well. Check each transaction as it is recorded. Catching mistakes early can prevent a lot of rework. To save time, don't include explanations in the journal entries. The following transactions were completed during September of this year (2014):

• Sept 1: Moore deposited $83,200 in a bank account for the purpose of buying Lakeland Indoor Sailboats, a business offering the use of small sailboats to the public at a large indoor pool with a fan system that provides wind. (Mr. Moore's CPA has written the JE for you.)
• 2: Bought Lakeland Indoor Sailboats in its entirety for a total price of $213,300. The assets include sailboats, $20,800; fan systems, $8,500; pool structure, $144,000; land, $40,000. He paid $64,400 cash down and signed a mortgage note for the remainder. (Mr. Moore's CPA has written the JE for you.)
• 3: Received and paid bill for newspaper advertising, $148.
• 3: Received and paid bill for property insurance and liability insurance for the coming year, $1,036.
• 3: Bought additional boats from A and M Manufacturing Co. for $6,520, paying $3,200 down, with the remainder on account and due in thirty days.
• 3: Signed a contract with a vending machine service to lease them space for their vending machines. The vending machine service agreed to pay Moore 10 per­cent of the sales generated from their machines, with the estimated rental income payable in advance. Lakeland Indoor Sailboats received advance cash payment for June, $180.
• 3:  Received bill from Quick Printing for promotional handouts, $368.
• 3: Signed a contract for leasing sailboats from Kelsey Boat Co. and paid rental fee for June, $632.
• 5: Paid cash for miscellaneous expenses, $92.44.
• 8: Received $2,632.50 in cash as income for the use of the boats.
• 9: Bought an addition for the fan system on account from Stanwood Pool Supply, $836.
• 15: Paid wages to employees for the period ending June 14, $4,200.
• 16: Paid the bill for promotional handouts already recorded on June 3.
• 16: Moore withdrew cash for personal use, $1,052.
• 16: Bought additional sails from Bergen Products, Inc., $854; on account and payment due in thirty days.
• 16: Received $3,043 in cash as income for the use of the boats.
• 19: Paid cash for miscellaneous expenses, $42.64.
• 20: Paid cash to A and M Manufacturing Co. as part payment on account, $480.
• 22: Received $5,082 in cash as income for the use of the boats.
• 23: Received a reduction in the outstanding bill from A and M Manufacturing Co. for a boat received in a damaged condition, $452. (Debit Accounts Payable, credit Sailboats.)
• 24: Received and paid telephone bill, $84.
• 29: Paid wages for period June 15 through 28, $4,652.
• 30: Paid cash to Stanwood Pool Supply to apply on account, $418.00
• 30: Received and paid electric bill, $42.
• 30: Paid cash as an installment payment on the mortgage, $1,880. Of this amount, $680 represents a reduction in the mortgage principal, and the remainder is interest expense.
• 30: Received and paid water bill, $432.
• 30: Bought additional boats from Stanski and Son for $4,852, paying $452 down, with the remainder due in thirty days.
• 30: Moore withdrew cash (dividend) for personal use, $1,156.
• 30: Received $4,632 in cash as income for the use of the boats.
• 30: Actual sales for vending machines for the month amounted to $2,320. Ten percent of $2,320 equals $232. Since you have already recorded $180 (see June 3 transaction) as unearned concession income, record the additional $52 as revenue (cash was not received.) earned from the vending machine operator.

Instructions from Mr. Moore:

1. Mr. Moore's CPA has created an accounting system - use copies of forms that are on Canvas such as the general journal and general ledger and for the trial balance, income statement, balance sheet, etc. Each JE should have an explanation. Posting should include posting references. Be sure to enter/complete the title of the trail balance, income statement, balance sheet, etc.

2. Journalize the transactions, starting on page 1 of the general journal; June 1 - 2 have already been journalized.

3. Post the general journal transactions to the general ledger accounts.

4. Prepare a trial balance (check figure $255,101.50).

5. Moore identified several accounts that may need to be adjusted. Use the trial balance to determine the balances and adjust the accounts. Data for the adjustments are as follows:

a. Insurance expired during the month, $86.

b. Depreciation of sailboats for the month, $804.

c. Depreciation of fan system for the month, $163.

d. Depreciation of pool structure for the month, $600.

e. Wages accrued at June 30, $696.

7. Journalize adjusting entries.

8. Post adjusting entries to the general ledger accounts.

9. Prepare an adjusted trial balance (check figure $257,364.50).

10. From the adjusted trial balance prepare the income statement (check figure $1,379.42).

11. From the adjusted trial balance prepare the statement of owner's equity.

12. From the adjusted trial balance prepare the balance sheet.

13. Close the accounts.

14. Prepare a post closing trial balance.

a. Based on the information you have developed, what is your opinion of the possible success of this company in the future? Why? (Write your answer on the last page of the Excel workbook).

Check Figures

• Cash Account balance $14,002.42
• Trial balance $255,101.50 (instruction 4, above)
• Adjusted trial balance, $257,364.50 (instruction 9, above)
• Net income, $1,379.42 (instruction 10, above)
• Post-closing trial balance, $241,743.00